USD/CHF Seems To Remain Weak Around 0.8900 As US Services PMI Is Coming

USD/CHF found temporary support around 0.8900 in Asian session on Wednesday. The outlook for USD/CHF seems fragile as the dollar’s rebound seems to be stalled as more investors speculate that the Federal Reserve (Fed) will start cutting interest rates from the September meeting.

The outlook for the Fed’s rate cut is firm, and market sentiment is positive for risk assets. S&P 500 futures recorded significant gains in Asian session. The US dollar index (DXY), which tracks the value of the US dollar against six major currencies, consolidated near a two-month low of 104.00.

As the US economic outlook seems to be losing momentum, traders have increased their bets that the Federal Reserve will start cutting interest rates from September. This view is based on the weak US ISM manufacturing purchasing managers’ index and the downward revision of the first quarter GDP.

Looking ahead, investors will focus on the US ADP employment change and ISM service PMI data for May, which will be released at 20:15 and 22:00 Beijing time. Economists predict that private employers will hire 173,000 job seekers, down from 192,000 in the previous reading. The Services Purchasing Managers’ Index (PMI), which measures activity in the services sector, which accounts for two-thirds of the economy, is estimated to have resumed expansion. The indicator is expected to be 50.5, up from 49.4 in the previous reading.

In Switzerland, the Swiss franc strengthened amid expectations that the Swiss National Bank (SNB) may intervene in currency markets to support the Swiss franc. Due to a weaker currency, Swiss exports are more competitive in the global market, which may deepen market concerns about upside risks to inflation.

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