USD/CHF trades around 0.8630, recovers recent losses due to less-dovish Fed

• USD/CHF edges higher as robust US labor and inflation data have diminished the likelihood of bumper rate cuts by the Fed.
• Atlanta Fed President Raphael Bostic expects just one more interest rate cut of 25 basis points this year.
• The Swiss Franc strengthened as lower inflation in September reduced the need for the SNB to implement substantial rate cuts.

USD/CHF retraces its recent losses registered in the previous session, trading around 0.8630 during the early European hours on Wednesday. The US Dollar (USD) continues to gain support as robust US Employment and Consumer Price Index (CPI) data have dampened expectations of aggressive Federal Reserve (Fed) easing.

Markets are now anticipating a total of 125 basis points in rate cuts over the next 12 months. According to the CME FedWatch Tool, there is currently a 94.1% probability of a 25-basis-point rate cut in November, with no expectation of a larger 50-basis-point reduction.

On Tuesday, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, indicated that he expects only one additional interest rate cut of 25 basis points this year, in line with his projections from the US central bank's meeting last month. "The median forecast called for a total of 50 basis points in cuts, on top of the 50 basis points already implemented in September," according to Reuters.

On the Swiss side, the yield on the 10-year government bond declined to 0.41% as traders assess the broader economic and financial environment in Switzerland. Bond yields are often a reflection of inflation expectations. Low inflation typically bolsters the currency by preserving its purchasing power, which means the Swiss Franc (CHF) could find support even as bond yields decrease.