USD/CHF falls to near 0.7950 due to US-Swiss tariff deal, SNB steady

• USD/CHF depreciates as the Swiss Franc receives support after Switzerland secured a tariff deal with the US.
• The Swiss Franc advances amid rising expectations of the SNB keeping policy rate unchanged at 0% in December.
• CME FedWatch Tool suggests pricing in a 43% chance of a 25-basis-point Fed rate cut in December.

USD/CHF retraces its recent gains registered in the previous session, trading around 0.7950 during the Asian hours on Tuesday. The Swiss Franc (CHF) gains against the US Dollar (USD) after Switzerland secured a deal to lower US tariffs to 15%, a significant drop from the 39% rate applied during the Trump administration. The development offers much-needed relief to a country that had been subject to the highest tariff levied on any developed economy.

The Swiss Franc (CHF) could find further support on rising expectations that the Swiss National Bank (SNB) will maintain its 0% policy rate in December, supported by forecasts of higher inflation. SNB Vice President Antoine Martin recently reaffirmed the outlook, saying inflation is "expected to increase slightly."

The USD/CHF pair gained ground on Monday as the US Dollar (USD) advanced amid declining US Federal Reserve (Fed) rate cut bets for December. The CME FedWatch Tool suggests that financial markets are now pricing in a 43% chance that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, down from 62% probability that markets priced a week ago.

Federal Reserve Vice Chair Philip Jefferson noted Monday that risks to the labor market now outweigh upside risks to inflation, while stressing that the Fed should proceed "slowly" with any additional rate reductions. However, Fed Governor Christopher Waller said that the US central bank should cut the interest rates when policymakers meet in December. Waller added that he's grown concerned over the labor market and the sharp slowdown in hiring.