USD/CHF drifts away from 0.7975 highs despite soft Swiss inflation data

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The US Dollar is trimming Wednesday gains on Thursday, pulling back to session lows near 0.7950. The generalised US Dollar weakness has offset the negative impact on the Swiss Franc from softer-than-expected inflation data.

The US Dollar gives away gains against the Swiss Franc, approaching 0.7950.
Weak US unemployment and concerns about the US Government shutdown keep the USD on its back foot.
In Switzerland, the weaker-than-expected CPI has been largely ignored by the markets.

Swiss consumer prices grew at a steady 0.2% year-on-year pace in September, against expectations of a moderate acceleration to 0.3%. Monthly inflation, on the contrary, accelerated its contraction to -0.2% from -0.1% in August.

These figures confirm the deflationary pressures of the Swiss economy, and keep pressure on the Swiss National Bank to cut interest rates into negative territory, a possibility that has been refused by the SNB President, Martin Schlegel.

The data, however, has a minor impact on the pair, which maintains a moderate bearish bias today, driven by the US Dollar’s weakness. The US government closure and the downbeat ADP employment report have bolstered hopes of further Fed rate cuts and are sending the US Dollar lower against its main peers today.

Economic Indicator

Consumer Price Index (MoM)

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 MoM figure compares the prices of goods in the reference month to the previous month. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.

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.