USD/CHF gains as focus sets on FOMC minutes, CPI data

The USD/CHF currency pair edged higher on Tuesday, as investors continued assessing the outlook for US interest rates in the wake of a strong employment report that drastically affected monetary easing expectations.

Markets are now pricing in about an 86% chance of a 25 basis point rate cut at the Federal Reserve’s policy meeting in November, compared to a 47% chance a week earlier.

Only 50 basis points of rate cuts are priced in by year-end, compared to over 70 bps a week ago.

Investor focus now sets on the key US CPI inflation report on Thursday that may provide further clues over the Fed’s interest rate cut trajectory.

Annual headline consumer inflation probably eased to 2.3% in September, according to market consensus, from 2.5% in August – the lowest rate since February 2021.

Another highlight this week will be the minutes of the Fed’s policy meeting in September, to be released on Wednesday, while at least 7 Fed representatives are scheduled to make speeches that same day.

As of 11:34 GMT on Tuesday the USD/CHF currency pair was edging up 0.32% to trade at 0.8562.