Swiss Franc Weakens on Soft Inflation and Manufacturing Data

The Swiss Franc has weakened following the release of soft inflation and manufacturing data. Consumer prices in Switzerland rose by just 0.4% year-on-year in July, marking the slowest pace of growth since March. The annual core inflation rate held steady at 0.3%, while consumer prices slipped by 0.1% on a monthly basis.

Nomura strategists expect inflation in Q3 to print below the Swiss National Bank's forecast, reinforcing the disinflationary trend. This suggests a softer fundamental environment for the Swiss Franc, which has already taken losses following the data release. The SVME Manufacturing PMI fell to 53.2 in July from 54.3 in June, missing market expectations of 55.0.

The USD/CHF pair remains on a stronger footing, trading around 0.8090 during European hours on Monday. However, the upside for the pair may be constrained by broad-based weakness in the US Dollar following official confirmation of joint foreign exchange interventions by Japan and the United States. The Bank of Japan data revealed expenditures reaching up to $58.97 billion, with Tokyo signaling a readiness to intervene further if necessary.