USD/CHF extends its losses for the second successive day, trading around 0.8490 during the Asian hours on Friday. The decline of the USD/CHF pair could be attributed to the subdued US Dollar (USD) following Thursday's economic data from the United States (US) reinforced the odds of a bumper rate cut by the Federal Reserve (Fed) next week.

According to the CME FedWatch Tool, markets are fully pricing at least a 25 basis point (bps) rate cut by the Federal Reserve at its September meeting. The likelihood of a 50 bps rate cut has sharply increased to 41.0%, up from 14.0% a day ago.

The decline in the US Treasury yields also contributes to the downward pressure for the Greenback. The US Dollar Index (DXY), which measures the value of the US Dollar against its six major peers, trades around 101.10 with 2-year and 10-year yields on US Treasury bonds standing at 3.58% and 3.64%, respectively, at the time of writing.

Former New York Fed President William Dudley suggested there is a strong case for a 50 basis points interest rate cut in the United States. Speaking at the Bretton Woods Committee's annual Future of Finance Forum in Singapore, Dudley remarked, "I think there's a strong case for 50, whether they're going to do it or not," per Reuters.

Last week, the Swiss Consumer Price Index fell to 1.1% year-on-year in August. Meanwhile, the monthly index showed no change against a 0.1% rise. This inflation report has further intensified speculation about an imminent rate cut by the Swiss National Bank (SNB) in September.

The market is anticipating a 25 basis points reduction at its September meeting. Traders will likely observe next week’s Trade Balance data to gauge the scale of interest rate cuts by the end of the year.

(This story was corrected on September 13 at 08:12 GMT to say that Thursday’s US data reinforce the likelihood of an aggressive Fed rate cut in September, not Friday's data.)

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