USD/CHF rises as traders prepare for NBS interest rate decision

• USD/CHF adds nominal gains as Swiss franc is weighed down by uncertainty ahead of NBS policy decision.
• The SNB is expected to cut interest rates for the third time in a row.
• Rising expectations for big Fed interest rate cuts in November are keeping the US dollar under pressure.

USD/CHF is marginally higher to near 0.8480 in the European session on Tuesday. Swiss franc assets rise as the Swiss franc (CHF) weakens amid uncertainty ahead of the Swiss National Bank’s (SNB) interest rate decision due on Thursday.

The SNB is expected to cut interest rates by 25 basis points (bps) to 1%. This would be the third consecutive cut in the quarterly percentage rate as inflation in the Swiss economy was kept below the bank’s 2% target from June 2023. In August, the annual consumer price index (CPI) decelerated further, to to 1.1. %, the lowest since April of this year.

Meanwhile, Swiss franc asset gains despite a retreat in the US dollar (USD), growing concerns about US job growth fueled market expectations for a second consecutive Federal Reserve interest rate cut ( Fed) to 50 basis points at the November meeting. The US Dollar Index (DXY), which tracks the greenback against six major currencies, is down at 100.80.

“The Federal Reserve will cut rates by another 50 basis points in November, a decision that will depend heavily on incoming data, particularly the next monthly jobs report,” according to strategists at Citi.

Later this week, investors will pay close attention to the US Personal Consumption Expenditure (PCE) price index for August, which will be released on Friday. Core US PCE inflation, the Fed’s preferred gauge, is expected to have risen to 2.7% from 2.6% in July.