0936 GMT – The Swiss franc’s strength is expected to continue, as the Swiss National Bank may stay cautious about reducing interest rates below the current 0% during Thursday’s meeting, according to Lee Hardman from MUFG Bank in a report. SNB officials have clearly stated that there is a higher threshold for reintroducing negative rates due to the negative consequences, he notes. “There is also hope following recent trade discussions between the U.S. and Switzerland that an agreement will be reached to reduce the tariff rate.” This lowers the chance of negative rates. The euro increases by 0.1% to 0.9347 francs. (renae.dyer@wsj.com)
Euro May Increase Against Dollar as It Appears Undervalued
0740 GMT – The euro is expected to rise against the dollar, as it is currently trading under its short-term fair value, while the U.S. currency may lose some of its gains following last week’s Federal Reserve meeting, according to ING’s Francesco Pesole in a report. The euro’s short-term fair value is approximately $1.1900. It recently remained stable at $1.1746. This creates potential for the euro to increase in value as the dollar might lose some of its upward movement fueled by Fed Chair Jerome Powell’s cautious remarks regarding future interest-rate reductions, he notes. Although Powell’s tone was cautious, the Fed’s dot plot projections suggest there could be two more rate cuts this year, which should help stabilize expectations about interest rates, he adds. The core personal consumption expenditures price index data released on Friday is also expected to support the likelihood of rate cuts, he states.renae.dyer@wsj.com)
Dollar Might Decline if Trump Seeks to Remove Fed’s Cook
0650 GMT – The dollar could decline if the Supreme Court supports President Trump’s attempt to dismiss Federal Reserve Governor Lisa Cook, according to Thu Lan Nguyen, an analyst at Commerzbank, in a report. “The result of the case is expected to have wide-ranging effects.” It will indicate whether the Supreme Court supports Trump, which is also important for other major decisions such as U.S. tariffs, she notes. It will also affect the Fed’s autonomy. If Trump prevails, it will become evident that anyone who does not comply with his requests for lower interest rates might face a similar outcome, she states. The chance of quicker and more substantial rate reductions would rise, she adds. (renae.dyer@wsj.com)
Sterling May Decline as U.K. Expectations for Interest Rate Reductions Seem Modest
0724 GMT – According to ING analyst Francesco Pesole, the British pound could decline against the euro before the end of the year due to the market’s overly cautious expectations for U.K. interest rate reductions and fiscal uncertainties. Market data from LSEG indicates that the market is anticipating only 7 basis points in rate cuts from the Bank of England by December. However, Pesole believes the BOE is expected to implement another rate cut in November. Additionally, discussions around the autumn budget in November may lead to greater fluctuations in the pound, he notes. For this week, movements in the pound against the euro should remain limited, unless there is a significant difference in the U.K. and European purchasing managers’ surveys on Tuesday, he adds. The euro is currently trading at 0.8711 pounds.renae.dyer@wsj.com)
Dollar Increases Following Federal Reserve Announcement, U.S.-China Discussions
0623 GMT – The dollar slightly increases following the Federal Reserve’s recent policy announcement and after President Trump mentioned he had a productive conversation with Chinese leader Xi Jinping. The Fed recently started reducing interest rates, as expected, but Fed Chair Jerome Powell appeared more cautious than some had hoped regarding future rate cuts. Trump shared on his Truth Social platform that an agreement regarding TikTok’s U.S. operations was approved after speaking with Xi on Friday. The DXY dollar index climbed 0.1% to 97.728, reaching a one-and-a-half-week peak of 97.823 overnight.renae.dyer@wsj.com)
H-1B Visa Policy Updates in the U.S. Strengthen Argument for Indian Rupee’s Weakness
0509 GMT — The modifications to the U.S. H-1B visa program strengthen the argument for the Indian rupee’s weak performance, according to Michael Wan of MUFG Bank in a research report. “In Asia, India is the main country that could be significantly impacted by these visa changes,” states the senior currency analyst. “Historically, Indians have been the primary group applying for and holding H-1B visas, accounting for between 50% and 70% of total petitions and new employment H-1B visa approvals,” Wan notes. This situation reinforces MUFG Bank’s confidence that the Indian rupee will lag behind other currencies, such as Asian foreign exchange. USD/INR is up 0.1% at 88.17.ronnie.harui@wsj.com)
Potential Biases Favor a Weaker Indian Rupee Against the Dollar
0336 GMT — The USD/INR pair has generally hovered around 88 for several weeks, but there are now clear risks pointing toward a weaker rupee, potentially approaching 90 in the coming months, according to Rohit Garg from Citi Research. India has experienced a difficult external environment over the past few months. Initially, the U.S. raised tariffs on Indian goods to 50% or higher, and more recently, President Trump signed a proclamation that introduced a $100,000 visa fee for H-1B applications, Garg notes in a report. Citi economists estimate the total U.S.-India trade relationship at approximately $250 billion, covering exports of goods and software services as well as remittance inflows. “The current challenging situation is expected to affect this figure, which could subsequently put pressure on the current account and the INR,” Garg states.monica.gupta@wsj.com)
