Solid Gold Berjangka – The USD/CHF pair traded relatively flat during Tuesday’s Asian session (Nov 3), having surrendered its earlier daily gains to hover around the 0.8180 level. The Swiss franc found support ahead of the release of domestic inflation data, while the US dollar struggled to gain momentum as the market braced for a series of key events in the United States.
Swiss inflation for October is expected to remain unchanged on a monthly basis (0%), while the annual rate is projected to rise to 1.3% from the previous 1.0%. A reading higher than anticipated could strengthen the franc, as it might shift market expectations regarding the future policy direction of the Swiss National Bank.
Recent Swiss economic data has presented a mixed picture. Real retail sales grew by 1.6% year-on-year in September—a slowdown from the 3.9% increase seen in August and below the 3% forecast. Conversely, the SVME Manufacturing PMI climbed to 56.7 in October from 55.3, marking the eighth consecutive month of expansion.
As for the US dollar, market participants remain cautious ahead of the US midterm elections and the labor market reports due later this week. Meanwhile, expectations regarding Federal Reserve policy remain firm; the market currently assigns a roughly 73% probability to an interest rate hike in December, following the Fed’s decision to keep rates unchanged at its October meeting.
In the near term, USD/CHF movements will likely be driven by the Swiss inflation figures and developments in US labor market data. Stronger-than-expected Swiss inflation could provide sustained support for the franc, while a robust US employment report might bolster expectations for a Fed rate hike, thereby offering support to the dollar. (srh)