USD/CHF tumbles to 0.9000 on upbeat market sentiment, US Inflation in spotlight

• USD/CHF drops sharply to 0.9000 as US Dollar slumps ahead of US Inflation data.
• S&P 500 opens on a positive note, indicating demand for risk-perceived assets.
• The SNB is expected to cut interest rates again as Swiss inflation remains below 2%.

The USD/CHF pair falls sharply to 0.9010 in Tuesday’s early New York session. The Swiss Franc asset weakens as the market sentiment remains cheerful even though traders pare bets supporting Federal Reserve (Fed) rate cuts from the June meeting. Market expectations for the Fed reducing rates ease as strong United States Nonfarm Payrolls (NFP) data strengthens the inflation outlook.

The S&P 500 opens on a positive note, exhibiting decent demand for risky assets. 10-year US Treasury yields drop to 4.37% on fears that risks to employment and inflation could be imbalanced if interest rates remain higher for a long period.

On Monday, Chicago Federal Reserve President Austan Goolsbee said the central bank must consider for how long interest rates will remain higher on Monday. Goolsbee warned that the Unemployment Rate could rise if interest rates remain high for too long.

The US Dollar Index (DXY) falls to 103.90 amid cheerful market sentiment. Going forward, investors will focus on the US consumer price inflation data for March, which will be published on Wednesday.

Monthly headline and core inflation are both forecasted to have increased at a slower pace of 0.3% from 0.4% in February. In the same period, economists expect the annual headline CPI to accelerate to 3.4% from 3.2%, while the core inflation is anticipated to decelerate to 3.7% from 3.8%. The inflation data is expected to significantly influence market expectations for Fed rate cuts.

On the Swiss Franc front, investors expect that the Swiss National Bank will cut interest rates again as inflation remains consistently below 2%. The SNB led the global rate-cut cycle as it surprisingly announced a dovish interest rate decision in the March meeting. The central bank lowered its borrowing costs by 25 basis points (bps) to 1.5%.