EURCHF Exchange Rate

Eurozone flash consumer sentiment index for September has been released at 10 am ET Thursday. After the data, the euro changed little against its major counterparts.

The Swiss franc traded lower against its most major counterparts in the European session on Thursday, as the Swiss National Bank surprised markets by keeping interest rates unchanged.

The euro was higher against its major counterparts in the European session on Wednesday amid risk appetite, as investors awaited the Fed's summary of economic projections and the updated quarterly rate projections — known as the dot plot —at the conclusion of a two-day policy meeting later in the day.

Eurozone inflation slowed unexpectedly in August, revised data from Eurostat showed on Wednesday. Consumer price inflation for August was revised down to 5.2 percent. Initially, the rate was seen at 5.3 percent, unchanged from July. However, core inflation that excludes prices of energy, food, alcohol and tobacco, was confirmed at 5.3 percent.

The downside surprise in US June CPI inflation has seen the dollar drop to new lows for the year. Over recent months I had been speculating that clear signs of US disinflation - and a weaker dollar - may emerge in 3Q23 and yesterday's moves could well be the start of an important market adjustment. 

Late cycle dollar strength meets the carry trade. I see two key themes driving FX markets in the near term. The first is central banks continuing to battle inflation, yield curves staying inverted, and the dollar continuing to hold gains. The second is cross-market volatility continuing to sink - generating greater interest in the carry trade. Expect these trends to hold into Fed, ECB and BoJ meet

Initially, the positive NFP gains gained attention, but this was quickly dampened by the first decline in household employment this year and a higher US unemployment rate, reaching a one-year high.

In April, the dollar underwent a slower correction compared to March. In response to persistent inflation, the Federal Reserve raised its key rates by 25 basis points to 5.00%-5.25% at the start of May.