USD/CHF extends losses for the second session near 0.8770, US CPI eyed

• USD/CHF losses ground as the US Dollar turns into negative territory.
• Downbeat US yields put pressure on the Greenback.
• US CPI (YoY) is expected to ease to 3.1%, while monthly inflation to rise by 0.1%.
• SNB could maintain rates at 1.75% on the eased Swiss inflation for November.

USD/CHF hovers around 0.8770 during the Asian trading hours on Tuesday, extending its losses for the second consecutive day ahead of US Consumer Price Index (CPI) data. The US Dollar Index (DXY) loses ground on downbeat US Treasury yields. The DXY moves below 104.00, with yields on 2-year and 10-year US bond coupons standing lower at 4.70% and 4.21%, respectively, by the press time.

The market expects the annual US Consumer Price Index (CPI) figure to ease to 3.1% from the previous 3.2%, with the monthly inflation figure anticipated to rise by 0.1%. The US Core CPI is expected to remain steady at 4.0%. Moreover, as per the CME FedWatch Tool, markets have factored in the expectation that the Federal Open Market Committee (FOMC) will keep the rate within the range of 5.25%–5.50%. Additionally, markets expect a 25 basis point (bps) rate cut by March 2024.

The Swiss National Bank (SNB) is expected to maintain policy rates at the unchanged level of 1.75% on Thursday, especially following the easing of the Swiss Consumer Price Index (YoY) for November to 1.4%, compared to the previous 1.7%.

The SNB will also communicate the Monetary Policy Assessment published in the Quarterly Bulletin, providing insights into the medium-term conditional inflation forecast. Investors will also pay close attention to the speech by the head of the Swiss National Bank, Thomas J. Jordan, as his remarks can significantly impact the value of the Swiss Francs (CHF).