USD/CHF Slumps Past 0.9820 Following Disappointing CPI Data

Following the release of a much-anticipated US inflation report that was lower than expected, the USD/CHF pair fell below the 0.9820 mark, triggering a risk-on urge in the financial markets as speculators priced in a less aggressive Federal Reserve policy stance. The USD/CHF currently trades at 0.9673, 1.6% below its opening price on Thursday.

The American Dollar (USD) suffered as a result of a lower-than-anticipated US inflation report released by the US Department of Labor. The US Consumer Price Index increased by 7.7% YoY in October, which was less than the 7.9 expectations.

Meanwhile, the core CPI climbed by 6.3% YoY, less than the 6.5% anticipated, excluding volatile items like food and energy. As soon as the information reached the wires, the US Dollar Index (DXY), which measures the value of the dollar against six other currencies, fell and, as of the time of writing, had increased its losses to 2%, at 108.222.

USD/CHF Weaker as Fed Rate Hike Projections Lowers

The Federal Reserve’s monetary policy is showing its influence on the job market at the same time as the Initial Jobless Claims for the most recent week increased more than anticipated.

Following the announcement, the USD/CHF plunged in the direction of four-month-old support formed by the lows of August 2022 and passes close to the 0.9670–80 region. The Fed officials’ signals that the rate of interest rate increases would slow down at a given time caused the USD to weaken, so the October numbers are paving the way for its first 50 basis point rate boost at the December meeting.

The CME FedWatchTool revealed that money market futures had priced in a 50 basis point rate hike by the Federal Reserve, with the probability now at 80%, up from 50% a day earlier.

According to President Logan of the Dallas Federal Reserve, the FOMC must use all of its resources to combat inflation, even though the October inflation report was favorable. The Federal Funds Rate (FFR) is currently in a restrictive zone, according to Fed officials Daly of Cleveland and Harker of Philadelphia, while Daly claimed that rates must be higher than anticipated in September.