USD/CHF flat lines above mid-0.7900s, moves little after Swiss consumer inflation data

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USD/CHF lacks any firm intraday directional bias on Thursday amid mixed fundamental cues.
The latest consumer inflation figures from Switzerland fail to provide any impetus to the CHF.
Fed rate cut bets keep the USD bulls on the defensive and contribute to capping spot prices.

The USD/CHF pair struggles to capitalize on the previous day's bounce from the 0.7930-0.7925 region, or a one-week low, and oscillates in a narrow trading band through the early European session on Thursday. Spot prices hold steady around the 0.7970 area and move little following the release of Swiss consumer inflation figures.

Switzerland’s statistics agency reported that the headline Consumer Price Index (CPI) declined by 0.2% in September, compared to a 0.1% fall recorded in the previous month. On a yearly basis, consumer prices were 0.2% higher during the reported month, matching August's final print and missing expectations for a 0.3% rise. The data, however, does little to provide any meaningful impetus to the Swiss Franc (CHF) or the USD/CHF pair amid mixed signals about the Swiss National Bank's (SNB) policy stance.

In fact, SNB President Martin Schlegel emphasised the central bank's willingness to cut interest rates further if necessary, though he also underscored the higher bar for a repeat of negative interest rates. Moreover, Schlegel had said that inflation is expected to rise slightly in the coming quarters, which could allow the SNB to leave rates unchanged. In contrast, dovish Federal Reserve (Fed) expectations keep the US Dollar (USD) bulls on the defensive and seem to act as a headwind for the USD/CHF pair.

Traders ramped up their bets that the US central bank will lower borrowing costs two more times by the year-end, following the disappointing release of the US private-sector employment details on Wednesday. Automatic Data Processing reported that private-sector employers shed 32K jobs in September, marking the biggest drop since March 2023. Adding to this, a partial US government shutdown contributes to the bearish sentiment surrounding the USD and caps the upside for the USD/CHF pair.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by the Swiss Federal Statistical Office on a monthly basis, measures the change in prices of goods and services which are representative of the private households’ consumption in Switzerland. The CPI is the main indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.