• USD/CHF rises over 0.84%, nearing the weekly high of 0.8500 amid strong US Dollar momentum.
• Markets estimate a 63% chance of a 25 bps rate cut by the Swiss National Bank at Thursday’s meeting.
• Falling SNB currency reserves signal intervention efforts to weaken the Franc ahead of leadership changes.

The USD/CHF edges higher during the North American session, registering gains of over 0.84% as traders brace for the Swiss National Bank (SNB) monetary policy decision. This and a strong US Dollar, kept the major at around the highs of the week at around 0.8500.

Traders brace for a possible 25 bps SNB rate cut, as the Swiss Franc weakens on intervention rumors and falling currency reserves

Data-wise, the Swiss and US economic dockets remained scarce, as US housing data showed a deterioration in the sector, though a strong recovery of the US Dollar offset it.

Meanwhile, the Swiss National Bank (SNB) is expected to lower rates by 25 basis points to 1.25% on Thursday. Interest Rate Probabilities suggest that market players estimate a 63% chance of a quarter-percentage-point cut by the SNB, while for a larger one, the chances are at 37%.

According to FX Street Analyst Joaquin Monfort: “Complaints from Swiss exporters who claim the strength of CHF is making them uncompetitive have put pressure on the SNB to directly intervene in FX markets to weaken the CHF.”

“Last week data revealed that the SNB’s Foreign Currency Reserves fell to CHF 694 billion in August, down from CHF 704 billion in July. This marks the fourth consecutive decline, suggesting the SNB continues selling the Franc to dampen its value,” Monfort added.