USD/CHF Drops to 0.7950 as Shutdown Worries and Rate Cut Talks Heat Up
The USD/CHF pair fell close to 0.7950 as the U.S. dollar weakened. The main reason is the growing worry about a possible U.S. government shutdown. Traders are waiting for updates from Washington before making big moves.
Another key factor is U.S. inflation data, which has raised hopes that the Federal Reserve may cut interest rates soon. Markets now see about an 88% chance of a rate cut in October, and nearly a 65% chance of another cut in December. The Fed’s preferred inflation measure, the core PCE index, rose 2.9% year-on-year, which matched expectations.
In Switzerland, the Swiss National Bank (SNB) recently left its rate unchanged at 0%. This came after six cuts since March 2024. Experts believe the SNB will keep rates at this level through next year because inflation is very low in the country.
In the U.S., the political situation is tense. If lawmakers don’t reach a funding deal by October 1, the government could shut down. This would not only affect federal services but also delay key economic data and add new tariffs on some goods.
Impact:
USD/CHF could fall further if shutdown risks remain. A Fed rate cut may add more pressure on the dollar, while the Swiss franc might stay firm.