• The USD/CHF exchange rate stays stable while investors wait for Fed members to make statements.
• Fed member Kugler said that rates will stay the same for longer if future data does not support a decline in inflation.
• The yield on the Swiss 10-year bond dropped to over 0.54%, almost reaching its lowest point since August 2022.

The USD/CHF pair remains stable at 0.8940 on Wednesday during the Asian session. A slight increase in the US dollar (USD), which is probably caused by higher Treasury yields, could help the USD/CHF pair.

Dr. Adriana Kugler, a member of the Federal Reserve (Fed) Board of Governors, recently observed that although inflationary pressures have decreased, the Fed still needs more evidence to support a rate reduction. Dr. Kugler proposed that it might be prudent to keep present rates in place for a longer period if impending data fails to demonstrate progress toward the 2% inflation target.

On Wednesday, the market will be focusing on the Fed Beige Book, important US economic data, and comments by Fed members Christopher Waller and Thomas Barkin. Regarding Switzerland, the focus will turn to statistics on the trade balance that is expected on Thursday.

Similar to the US bond yield trend, the Swiss 10-year government bond yield dropped even further to over 0.54%, almost reaching its lowest point since August 2022. This shift came after comments made by Federal Reserve Chair Jerome Powell, which raised hopes for a rate reduction by the Fed in September.

Fed Chair Powell hinted on Monday that interest rate reduction may be on the horizon by saying that recent US inflation figures “add somewhat to confidence” that inflation is steadily moving towards the Fed’s target.

For the second time in a row, the Swiss National Bank (SNB) lowered its benchmark interest rate by 25 basis points in June. The Swiss Franc’s (CHF) strength and the lack of significant inflationary pressures were the driving forces for this choice.