USD/CHF reaches two-month highs near 0.8700 as traders expect nominal rate cuts by the Fed

• USD/CHF extends its gains as recent US data fade the likelihood of a bumper rate cut by the Fed.
• Former President Donald Trump's allies have faced at least 10 court defeats that could impact the outcome of the election.
• The Swiss Franc could experience a decrease in safe-haven demand due to the easing tensions in the Middle East.

USD/CHF continues to gain ground as the US Dollar (USD) strengthens as recent positive economic data from the United States (US) has fueled expectations for a more cautious stance from the Federal Reserve (Fed) in November. The USD/CHF pair reaches two-month highs around 0.8700 during the Asian hours on Monday.

On Friday, data showed that the US Michigan Consumer Sentiment Index increased to 70.5 in October, up from 68.9 previously, surpassing the expected forecast of 69.0. In addition, Durable Goods Orders fell by 0.8% month-over-month in September, which was a smaller decline than the anticipated 1.0% drop.

The US Dollar receives support from the higher Treasury yields. The US Dollar Index (DXY), which measures the value of the US Dollar against its six major peers, trades around 104.50 with 2-year and 10-year yields on US Treasury bonds standing at 4.12% and 4.27%, respectively, at the time of writing.

Regarding US presidential election, Over the past three weeks, allies of former President Donald Trump have faced at least 10 court defeats in key battleground states that could impact the outcome of the November 5 election between Republican candidate Trump and his Democratic opponent, Vice President Kamala Harris.

The Swiss Franc (CHF) may encounter difficulties as expectations rise for another interest rate cut by the Swiss National Bank (SNB) at its upcoming December meeting. Traders are likely to keep an eye on the Consumer Price Index (CPI) for October, set to be released later this week.

Additionally, the Swiss Franc could experience a decrease in safe-haven demand due to the easing of geopolitical tensions following Israel's airstrikes on Iran early Saturday. These strikes, aimed at missile and air defense sites, were less aggressive than many had anticipated. Iran has downplayed the damage, with Supreme Leader Ayatollah Ali Khamenei stating that the attack "should neither be downplayed nor exaggerated."