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• USD/CHF trades in negative territory near 0.8960 for the second consecutive day on Friday.
• Traders raised their bets on Fed rate cuts in September after the softer-than-expected June US CPI inflation report.
• The speculation that the SNB will cut further interest rates might cap the pair’s downside.

The USD/CHF pair trades on a weaker note around 0.8960 during the early European session on Friday. The downtick of the pair is backed by the softer US Dollar (USD) after US consumer prices unexpectedly fell in June. Investors will take more cues from the US June Producer Price Index (PPI) and the preliminary July Michigan Consumer Sentiment gauge for fresh impetus, which is due later on Friday.

The US CPI dropped 0.1% MoM in June after being unchanged in May, according to the Bureau of Labor Statistics on Thursday. This figure registered the lowest monthly reading since May 2020. Meanwhile, the annual CPI rose 3% YoY in the same report period, the lowest reading in a year. The softer inflation reading spurred the expectation that the Federal Reserve (Fed) would cut the interest rate in the coming months.

Chicago Fed President Austan Goolsbee said early Friday that the latest inflation data was “excellent,” adding that the reports provided proof that the Fed is on track to meet its 2% target. Meanwhile, St Louis Fed President Alberto Musalem marked  "encouraging further progress" toward the Fed inflation target. San Francisco Fed President Mary Daly noted that the cooling of price pressures bolsters the case for cutting rates, even if the timing remains a matter for debate. The Greenback edges lower amid the growing speculation of a Fed rate cut this year, with traders seeing a nearly 85% chance of easing in September, according to CME Group’s FedWatch Tool.

On the Swiss front, geopolitical tensions, political uncertainty in the US and Europe, and concerns about the global economic slowdown might boost safe-haven assets like the Swiss Franc (CHF). However, the speculation that the Swiss National Bank (SNB) will cut further interest rates might exert some selling pressure on the CHF.

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