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Swiss franc firms as traders pare bets for September Fed hike
Ahead of US data, futures pricing for a 25 basis point Fed hike next month fell to a 30% chance from 67% two weeks ago.
The Swiss franc edged up from two-week lows versus the US dollar as the USD came under pressure from market expectations shifting away from a possible Federal Reserve rate hike in September, FXStreet said.
In the USD/CHF pair, the market drifted to session lows below 0.8125 after failing to hold above 0.8150 on Thursday, with attention turning to upcoming US Retail Sales and Michigan Consumer Sentiment readings.
FXStreet cited expectations that July US Retail Sales will rise 0.1% after a 0.2% increase in June, while the University of Michigan survey is forecast to be little changed in August; earlier this week, producer prices eased beyond expectations and CPI moderated, alongside an unexpected employment contraction that led futures markets to cut Fed tightening bets.
While the US data set the near-term tone, the Swiss franc also remains weighed by a large policy-rate gap versus the Swiss National Bank, which supports carry trades, with OCBC expecting Swiss rates to stay at zero for the rest of the year, reinforcing continued CHF softness, FXStreet added.