Swissie drifting ahead of inflation release

The Swiss franc is showing little movement for a second straight day. In the North American session, USD/CHF is trading at 0.9993, down 0.03%.

Swiss consumer sentiment remains in deep-freeze

Consumer confidence fell in the October survey to -47, down from -42 in the previous quarter. This marked a record low, as Swiss consumers have become even more pessimistic about the economic outlook. The survey found that consumers are concerned about inflation and remain cautious about making large purchases. Inflation has been on the rise, but the 3.3% pace reported in September pales in comparison to the double digits we are seeing in the eurozone and the UK. The October inflation report will be released on Thursday, with a forecast of 3.2%.

The Swiss economy is going through a rough spell, and this is reflected in the KOF Economic Barometer, a key measure of economic activity.  The index decreased in October to 90.9, down from 92.3 in September. This marked the sixth successive month that the index has been below the long-term average of 100. The primary driver of the downturn was manufacturing, which has been hurt by sluggish global demand.

The Federal Reserve is virtually certain to raise rates by 0.75% at today’s meeting, but what happens next is uncertain. The Fed seems to be getting close to the end of the current tightening cycle, but hopes that it will ease up on rates as early as next month could be premature, as inflation remains stubbornly high. The Fed signalled a 4.6% terminal rate in September, but the markets are currently pricing in a terminal rate of 5.0% early next year. Investors are already looking ahead to the December meeting, and they will be looking for clues from Fed Chair Powell about what he has planned in the coming months.

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USD/CHF Technical

• USD/CHF faces resistance at 1.0047 and 1.0137
• There is support at 0.9944 and 0.9857

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