Swiss franc sharpens decline to three-month low as inflation subsides

Swiss franc fell in European trade on Wednesday against a basket of major rivals, on track for the fourth profit in a row against the greenback, and plumbing three-month lows as inflationary pressures on the Swiss National Bank subside. 

On the other hand, inflation persists in the US, heaping pressure on the Federal Reserve and hurting the odds of early US interest rate cuts in the first half of the year. 

USD/CHF

USD/CHF rose 0.15% to 0.8882, a November 17 high, with a session-low at 0.8857.

The franc lost 1.3% against the dollar on Tuesday, the largest loss in 2024 following scorching US inflation data. 

Swiss Inflation

Earlier data showed Swiss consumer prices rose 1.3% y/y in January, below estimates of 1.7%. 

It’s the weakest reading since October 2021, a sign of slowed inflation, in turn paving the way for a Swiss rate cut in March.

The Dollar

The dollar index rose 0.1% on Wednesday on track for the third profit in a row against a basket of major rivals, hitting a three-month high at 104.98. 

The gains came following US consumer prices data which showcased the growing inflationary pressures on Fed policymakers. 

The likelihood of a US interest rate cut in March tumbled to just 9%, while the odds for such a cut in May fell to 37%.