USD/CHF Extends Losses, Breaks Below 0.9050

USD/CHF extended losses around 0.9020 during early European trading on Monday. USD/CHF was dragged lower by a weaker dollar following the release of US personal consumption expenditures (PCE) price index inflation data. Swiss consumer price index for May will be in focus on Tuesday ahead of the release of US employment data.

Uncertainty over the timing of a rate cut by the US Federal Reserve (Fed) weighed on the US dollar (USD) as the recent PCE report showed that US inflation remained stable in April. The US Department of Commerce reported on Friday that the US headline PCE rose 0.3% month-on-month in April, unchanged from an unrevised increase in March.

In addition, the core PCE, the Fed’s preferred inflation measure, rose 0.2% month-on-month in April, compared with a 0.3% increase in March. The core PCE price index climbed 2.8% year-on-year, in line with expectations. Investors have raised the probability of a Fed rate cut in September to nearly 53% from 49% before the inflation report. Traders will be watching the U.S. ISM Manufacturing Purchasing Managers’ Index (PMI) for fresh momentum, with the index expected to rise to 49.8 in May from 49.2 in April. A stronger-than-expected result could dampen expectations of a rate cut by the Federal Reserve this year and put a cap on the dollar’s downside.

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