Markets trim Fed rate hike bets for September after softer US inflation and jobs data, weighing on the USD.
The Swiss Franc (CHF) rebounds from a two-week low against the US Dollar (USD) as traders scale back expectations for a Federal Reserve interest rate increase in September. The USD/CHF pair falls below 0.8125, retreating from Thursday’s high near 0.8150, ahead of key US economic releases later today.
US Retail Sales are forecast to rise 0.1% in July, slowing from a 0.2% gain in June, while the Michigan Consumer Sentiment Index is expected to remain largely unchanged in August. Earlier data showed US producer prices easing more than expected and the Consumer Price Index moderating in July, following weaker-than-expected employment figures.
Futures markets now price a 30% chance of a 25 basis point Fed rate hike in September, down from higher probabilities earlier in the week. Analysts note the USD rally has stalled as Fed policy expectations shift, with currencies like the CHF recovering lost ground.