USD/CHF slips below 0.9140 as US Dollar retreats ahead of US preliminary PMI

The USD/CHF pair dips after facing selling pressure near 0.9140 in Thursday’s European session. The Swiss Franc asset comes under pressure as the US Dollar edges down amid firm speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting. The market sentiment has improved due to firm Fed rate-cut prospects.

S&P 500 futures have posted significant gains in the London session, suggesting a sharp increase in investors’ risk-appetite. US yields have slumped as firm Fed rate-cut bets is an unfavorable scenario for them. 10-year US Treasury yields have dropped to 4.42%.

Investors remain confident that the Fed will return to policy normalization in September despite the message from officials in the Federal Open Market Committee (FOMC) minutes was clear that interest rates will remain steady at their current levels until they get greater confidence that inflation will sustainably decline to the desired rate of 2%.

The reason behind strong investors’ confidence on rate cuts is that the commentary from officials was based on stubbornly higher inflation in the first quarter of this year. However, the Consumer Price Index (CPI) report for April showed that price pressures declined in line with estimates.

Meanwhile, investors await the US preliminary S&P Global PMI data for May, which will be published at 13:45 GMT. The Manufacturing and Services PMI are forecasted to have remained unchanged at 50.0 and 51.3, respectively.