Trump’s unexpectedly harsh retaliatory tariffs triggered a wave of risk-off sentiment, fueling concerns about a potential global recession. As a result, the US dollar has weakened, with markets pricing in more aggressive rate cuts, anticipating a deeper economic impact on the US. The tariff announcement acted as the catalyst for the move, pushing the currency pair out of its month-long range and accelerating selling pressure.
In the current market environment, attempting to catch a falling knife is risky, especially with no clear bullish drivers in sight. A temporary rebound could occur if the Federal Reserve delivers hawkish comments or if US economic data significantly exceeds expectations. However, such a move would likely present another selling opportunity rather than a lasting recovery.
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Latest Inflation Data from the Federal Statistics Office (3 April 2025):
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Switzerland’s Consumer Price Index (CPI) for March increased by 0.3% year-over-year (y/y), falling short of the expected 0.5% rise.
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The figure remains unchanged from the previous month’s increase of 0.3%.
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Core CPI (Excluding Volatile Items):
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Core inflation held steady at 0.9% y/y, the same as the prior reading.
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This suggests underlying inflation pressures remain stable, despite external economic uncertainties.
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Market Implications:
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The lower-than-expected CPI could ease pressure on the Swiss National Bank (SNB) to further tighten monetary policy.
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Investors will watch for any signals from the SNB on future rate decisions, particularly given global inflation trends.
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A weaker inflation reading may also weigh on the Swiss franc (CHF), as markets assess potential rate cuts or dovish signals from policymakers.
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