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    USD/CHF declines to near 0.8780 amid the Fed’s apprehension regarding policy rate cuts

    Source Fxstreet
    Feb 22, 2024 05:17
    • USD/CHF extends losses for the third successive session on Thursday.
    • The higher January’s US CPI and PPI data prompts the Fed to prolong elevated borrowing costs.
    • SNB is expected to policy easing cycle from March as the country’s inflation drops.

    USD/CHF continues to lose ground for the third consecutive session on Thursday. The decline in the US Dollar (USD) contributes to undermining the USD/CHF pair, trading around 0.8780 during the Asian hours on Thursday.

    The Federal Open Market Committee (FOMC) Minutes revealed policymakers' apprehension regarding the timing of interest rate cuts, suggesting that policy easing will not commence in the upcoming monetary meetings. This stance may be influenced by the higher Consumer Price Index (CPI) and Producer Price Index (PPI) figures from January, along with robust February employment data.

    Market participants have largely abandoned expectations for any interest rate cuts in March and May, but they persist in speculating that the first cut will occur in June. According to the CME FedWatch Tool, there's a 52.2% probability of a 25 basis points (bps) rate reduction in June.

    On the Swiss side, the market anticipates that the Swiss National Bank (SNB) will commence a rate-cut cycle starting from March. This expectation arises as the country's inflation has decreased despite market forecasts of higher prices. The decline in inflation could be attributed to the phasing out of electricity subsidies and the restructuring of value-added tax policies.

    The Swiss Franc (CHF) received upward support from favorable Swiss Trade Balance figures. The report showed a substantial increase in January’s trade surplus. Furthermore, SNB increased its foreign exchange reserves for the second successive month in January. The Federal Statistical Office of Switzerland is set to release the Employment Level for the fourth quarter of 2023 on Friday.

     

    Disclaimer: For information purposes only. Past performance is not indicative of future results.
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    USD/JPY goes on a roller-coaster ride prompted by geopolitical riskUSD/JPY is trading in the 154.50s on Friday after declining to a low for the day in the 153.00s on the back of a spike in safe-haven demand that disproportionately favored the Japanese Yen (JPY).
    Source  Fxstreet
    USD/JPY is trading in the 154.50s on Friday after declining to a low for the day in the 153.00s on the back of a spike in safe-haven demand that disproportionately favored the Japanese Yen (JPY).
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    Source  Fxstreet
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    EUR/USD Price Analysis: Extends recovery, the first upside target is seen at 1.0700The EUR/USD pair extends its recovery near 1.0688 on Thursday during the early European trading hours.
    Source  Fxstreet
    The EUR/USD pair extends its recovery near 1.0688 on Thursday during the early European trading hours.
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