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USD/CHF Testing Key Support After US CPI Undermines Greenback

SWITZERLAND
  • USD/CHF holds at session lows through the US cash equity open, with the pair breaking below the 0.8954 low printed Nov6. The move in spot opens support layered between 0.8888 (Oct24 low) and the 100-dma at 0.8902. Similarly, EUR/CHF remains higher on the day, within close proximity of 0.9694 the Sep-27 high and bull trigger.
  • The USD weakness persists across G10, with the greenback the poorest performer in G10 following the softer-than-expected CPI, which has further filtered into global money markets, with OIS now pricing 50bps in cumulative cuts from the Fed by July 2024.
  • Unsurprisingly, markets continue to price no change from the SNB at the December meeting (Dec-23 SARON futures remain at 98.290), however the soft CPI print has accelerated SNB cut pricing across H2 2024.
  • Sep-24 SARON futures have rallied around 7 ticks following the US CPI release, with CHF OIS forward swaps similarly under pressure. This runs in contrast with a speech from SNB's Jordan today, who stated the bank is "not sure" whether SNB rates have reached their peak.
  • Market focus shifts to the CPI print on December 4th (last reading before the Dec 14th SNB), which should feed directly into the bank's next round of CPI forecasting. Their September view saw CPI ending the year at 2.0%, rising to 2.2% by mid-24, before fading into the second half of the forecast horizon.
  • October CPI came in at 1.7% Y/Y, meaning if inflation holds at these levels, observed CPI will undershoot the SNB forecast. This could pose downside risks to the CPI forecasts ahead, and should cement an SNB view that rates are at a near-term peak.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Foreign Exchange BulletsHomepagemarkets-real-timeBulletMarketsFixed Income BulletsSwiss National Bank Market News
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Foreign Exchange BulletsHomepagemarkets-real-timeBulletMarketsFixed Income BulletsSwiss National Bank Market News

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