USD/CHF holds steady above 0.9100 ahead of Swiss GDP data

• USD/CHF trades on a flat note near 0.9125 in Wednesday’s early European session. 
• The US CB’s Consumer Confidence rose to 102.0 in May from 97.5 in April, better than the estimated. 
• The Swiss GDP growth number is estimated to grow by 0.3%.QoQ in Q1.

The USD/CHF pair trades flat around 0.9125 during the early European session on Wednesday. Traders remain cautious ahead of the crucial inflation readings this week. Later on Wednesday,  the Fed’s Beige Book will be released, and the Fed’s John Williams is scheduled to speak.

The US Federal Reserve (Fed) is unlikely to cut rates until later this year as inflation remains sticky. Federal Reserve Bank of Minneapolis President Neel Kashkari said on Tuesday that the US central bank’s policy stance is restrictive, but further rate hikes cannot be ruled out. Investors are now pricing in nearly a 50% chance that the Fed will hold rates in September, according to the CME FedWatch tool.

Data from the US Conference Board on Tuesday revealed that Consumer Confidence improved to 102.0 in May from 97.5 in April, better than the estimation of 95.9. The figure unexpectedly rose in May after a decline for three straight months, but worries about inflation persisted, and the US consumer expected higher interest rates over the next year. This continues to underpin the Greenback and create a tailwind for USD/CHF.  

Switzerland’s State Secretariat for Economic Affairs (SECO) will report the nation’s Gross Domestic Product (GDP) on Thursday. The GDP growth number for the first quarter (Q1) of 2024 is estimated to expand by 0.3%.QoQ in Q1. If the report shows a stronger-than-expected reading, this could provide some support to the Swiss Franc (CHF).

Apart from this, Israeli forces shelled a tent camp in a designated “safe zone” west of Rafah and killed at least 21 people, including 13 women and girls, in the latest mass killing of Palestinian civilians, according to Al Jazeera. Investors will closely watch the developments surrounding the geopolitical tensions in the Middle East. Any signs of escalating risks might further boost safe-haven assets like the CHF and cap the upside for the pair.