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USD/CHF consolidates around 0.7960 ahead of US inflation data

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USD/CHF consolidates around 0.7960 ahead of US inflation data

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New update 2025.10.24 13:37
USD/CHF consolidates around 0.7960 ahead of US inflation data

update 2025.10.24 13:37

  • USD/CHF ranges around 0.7960 as investors await the US inflation data for September.
  • Both US headline and the core CPI are expected to have risen by 3.1% on an annualized basis.
  • SNB policymakers expect that inflationary pressures won't remain persistently negative.

The USD/CHF pair trades in a tight range around 0.7960 during the late Asian trading session on Friday. The Swiss Franc pair consolidates as the US Dollar (USD) ranges ahead of the delayed United States (US) Consumer Price Index (CPI) data release.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades inside Thursday's trading range around 99.00.

The US CPI report is expected to show that the headline inflation rose at a faster pace of 3.1% on an annualized basis against the prior release of 2.9%, with core figures growing steadily by 3.1%. On a monthly basis, the headline and the core CPI are estimated to have risen steadily by 0.4% and 0.3%, respectively.

The impact of the US inflation data is expected to be limited on market speculation for the Federal Reserve's (Fed) monetary policy outlook as latest commentaries from officials showed that they are more concerned about the slowing job market than price pressures remaining well-above the 2% target.

In Friday's session, investors will also focus on trade talks between US Treasury Secretary Scott Bessent and China Vice Premier He Lifeng in Malaysia. Top negotiators from both nations are expected to talk over reducing tariffs and non-tariff barriers to promote fair trade practices.

Meanwhile, the Swiss Franc (CHF) trades broadly calm as minutes of the Swiss National Bank's (SNB) September meeting showed on Thursday that officials didn't see the need for any adjustment in the current monetary conditions. SNB policymakers argued that there is no need for further "monetary policy expansion" as inflation is unlikely to remain "persistently negative". Officials also stated that the impact of US tariffs on the Swiss economy would be limited.

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the 'de facto' currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world's reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed's 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed's weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.


Date

Created

 : 2025.10.24

Update

Last updated

 : 2025.10.24

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