Swiss Franc eases within range following soft Swiss inflation figures

The Swiss Franc (CHF) has pulled back from session highs against the US Dollar (USD) on Thursday, following the release of softer-than-expected Swiss Consumer Price Index (CPI) figures. The USD/CHF pair has ticked up from intraday lows at 0.8080, although it remains trading within the weekly range, not far from one-year highs at the 0.8140 area.

Swiss consumer inflation slowed down to a 0% monthly growth in June from the 0.2% rise seen in May. This is a sharper slowdown than the 0.1% anticipated by the market consensus. Likewise, yearly inflation eased to 0.5%, from the 0.6% year-on-year rate seen in May.

These figures practically confirm that the Swiss National Bank (SNB) will keep its benchmark interest rate unchanged, at the current 0% level for the rest of the year and probably well into 2027. With investors ramping up bets on Federal Reserve (Fed) rate hikes, the low SNB interest rates are likely to act as a headwind for CHF rallies.

Later on the day, the focus will shift to the US Nonfarm Payrolls (NFP) report, which is expected to show that the US economy created 110K net jobs in June, following three months of strong job growth. Investors are likely to analyse these figures from a monetary policy perspective, looking for confirmation of a Fed rate hike in September. The risk is skewed to the upside for the US Dollar.