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Swiss franc edges up as softer US inflation pressures the dollar

USD/CHF moved lower near 0.8140 after US producer price data cooled, while markets scaled back odds of a September rate hike to 34.8%.

Reported · Written up by our desk · Major Pairs

The Swiss franc strengthened against the US dollar as investors reacted to softer US inflation data, with USD/CHF pausing its four-day advance and trading around 0.8140 during Friday’s Asian session, FXStreet reported.

FXStreet said the US Bureau of Labor Statistics showed wholesale costs for goods and services were flat in July, cooling more than expected, while the core Producer Price Index rose 0.2% versus the 0.3% forecast. On a year-over-year basis, headline PPI increased 4.7% and core PPI rose 4.2%.

The cooling inflation picture shifted expectations for Federal Reserve policy, with the CME FedWatch Tool indicating markets priced a 34.8% probability of a US rate hike at the September meeting, down from 40% immediately after the PPI release.

FXStreet added that Swiss inflation also eased, falling to 0.4% in July from 0.5%, and noted the Swiss National Bank is expected to keep its policy rate at 0% throughout the year, treating further cuts as a contingency. Analysts at OCBC said near-term inflation risks remain limited and any imported-price impact from franc weakness is likely to take at least two quarters to show up.

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