The USD/CHF currency pair settled above Friday’s low of 0.7878, its weakest level since October 17th, as traders now saw a Federal Reserve rate cut in December as much less likely than before.
An increasing number of Fed officials have signaled reticence on further rate cuts due to inflation concerns and indications of relative stability in the US labor market.
The Federal Reserve lowered its federal funds rate target range by 25 basis points to 3.75%-4.00% at its October meeting. But, Fed Chair Jerome Powell had said that a December rate cut was not a foregone conclusion.
Markets are now pricing in about a 44% chance of a 25 basis point Fed rate cut in December, compared to a 67% chance a week earlier.
This has triggered a sell-off in US stocks and government bonds and a rush into safe-haven currencies such as the Swiss Franc.
Market players are also attempting to predict what US macro data will show when it is published after the US shutdown ends.
Meanwhile, Switzerland’s producer and import prices fell 1.7% year-on-year in October, data showed.
It has been the 30th consecutive month of producer deflation.
The major Forex pair lost 1.41% for the week.
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