USD/CHF trades with mild negative bias above 0.9000 ahead of US PMI data

• USD/CHF consolidates in a narrow trading range near 0.9015 on the softer USD on Monday.  
• The US Core PCE figures, rose 2.8% YoY and 0.3% MoM in February, matching the market estimation.
• ING analysts expect two more rate cuts this year from the SNB, unless there is a surprise that causes inflation to grow rapidly again.

The USD/CHF pair trades with mild negative bias around 0.9015 during the early European session on Monday. The dovish comments from Federal Reserve (Fed) Chairman Jerome Powell on Friday weigh on the US Dollar (USD) and cap the upside of the USD/CHF pair. The attention is shifted to the US March ISM Manufacturing Purchasing Managers Index (PMI), due later on Monday. The market is likely to stay subdued amid the Easter Monday bank holiday in Switzerland, 

The recent inflation data was in line with market expectations in February, potentially keeping the Fed on hold before it can begin cutting interest rates this year. Market pricing is in line with Fed projections for three rate cuts, according to the CME Group’s FedWatch Tool. On Friday, the US Bureau of Economic Analysis reported that the Personal Consumption Expenditures Price Index (PCE) rose 2.5% YoY in February, in line with the market consensus. Meanwhile, the monthly PCE figure increased by 0.4% MoM in the same month, softer than expected. The Fed’s preferred inflation measure, Core PCE, rose 2.8% YoY and 0.3% MoM in February, matching the market estimation. 

On the Swiss front, the Swiss National Bank (SNB) decided to cut the benchmark interest rate by 25 basis points (bps) to 1.5% on March 21. The SNB statement noted that the easing of monetary policy has been made possible because the battle against inflation over the past two and a half years has been effective. ING analysts expect two more rate cuts this year from the SNB, unless there is a surprise in the international economic environment that causes inflationary pressures to grow rapidly again.

The Swiss Consumer Price Index will be due on Thursday, which is expected to show an increase of 1.4% in March. If the Swiss CPI inflation data came in softer than expected, this could exert some selling pressure on the Swiss Franc (CHF). On Friday, investors will turn their attention to the US employment data, including the Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings for March.