USD/CHF moves below 0.8450 on dovish Fed announcement, Swiss Foreign Exchange Reserves expected

• USD/CHF extends decline on dovish comments from Fed officials.
• Fed’s Austan Goolsbee said long-term trends in the labor market and inflation data warrant Fed easing soon.
• Swiss Foreign Exchange Reserves will be watched for further information on the SNB’s policy stance towards the CHF.

The USD/CHF extended its losing streak for the fourth consecutive session, trading around 0.8430 during Asian hours on Friday. Dovish comments from Federal Reserve (Fed) officials put downward pressure on the US Dollar (USD) and weakened the USD/CHF pair.

Chicago Fed President Austan Goolsbee said on Friday that the long-term trend in the labor market and inflation data warrants an easing of Fed interest rate policy soon and then steadily over the next year. FXStreet’s FedTracker, which assesses the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Goolsbee’s words as neutral with a score of 3.8.

The US Dollar Index (DXY), which measures the value of the greenback against its six major peers, continued to lose ground for the third consecutive day, driven by declining US Treasury yields. The DXY is trading around 101.00 with 2-year and 10-year US Treasury yields standing at 3.73% and 3.71% respectively at the time of writing.

On the Swiss front, the seasonally adjusted unemployment rate is holding steady at 2.5% for August, data showed on Thursday. Traders now look ahead to Friday’s publication of August Foreign Exchange Reserves for more insight into the Swiss National Bank’s (SNB) policy stance on the Swiss Franc (CHF).

Moreover, recent data showed that domestic inflation slowed more than anticipated in August, fuelling expectations of another interest rate cut by the Swiss National Bank (SNB). The Swiss Consumer Price Index (CPI) rose 1.1% year-on-year, below the previous reading of 1.3% and below the market consensus of 1.2%.