USD/CHF edges up above 0.8050 as Swiss CPI disappoints

• The US Dollar crawls into session. highs above 0.8050 against the Swiss Franc.
• A further contraction in Swiss CPI added pressure on the CHF.
• Deflationary pressures and soft economic data keep pressure on the SNB to cut interest rates further.

The US Dollar has ticked up to session highs, right above 0.8050, on Monday's early European session, extending gains for the fourth consecutive day. The Swiss Franc's weakness has provided additional support for an already buoyant Greenback, as the Swiss Consumer Prices Index (CPI) data revealed stronger-than-expected deflationary pressures in October.

Consumer inflation contracted at a 0.3% pace last month, following a -0.2% reading in September, against market expectations of a mild improvement to -0.1%. Likewise, yearly inflation eased to 0.1% from 0.2% in the previous month, undershooting the market consensus of an acceleration to 0.3%.

SNB is pressured to cut rates into negative levels

The disinflationary figures keep pressure on the Swiss National Bank (SNB) to cut rates further below the current 0% level. SNB President, Martin Schlegel, has been reluctant to accept that possibility, but the growing deflationary pressures and the soft economic momentum amid the steep US tariffs are pointing in that direction.

The US Federal Reserve (Fed), cut interest rates last week, but Chairman Jerome Powell warned that a December rate cut is far from a done deal, which has triggered some monetary policy divergence with the SNB, which is underpinning support for the Greenback.

Investors will be observing US private data this week to confirm those views with manufacturing data in focus today. US S&P Global Manufacturing PMI is expected to corroborate that business activity in the sector improved to 52.2 in October, from 52.0 in September. The US ISM PMI, however, is forecast to reveal further contraction, with the PMI little changed, –49.2 from the previous month's 49.1 level– and with the prices subindex showing increasing inflationary pressures; 62.6 in October, from 61.9 in September.