The US Dollar (USD) weakened against both the New Zealand Dollar (NZD) and the Swiss Franc (CHF) following dovish remarks from New York Federal Reserve President John Williams on Tuesday [1][2]. Williams stated that while one more rate hike may be appropriate this year, he does not anticipate additional rate increases in 2027, and expressed confidence that inflation will slow 'quite a bit' toward the 2% target next year [1][2]. This dovish shift was reflected in the FXS Speechtracker score, which dropped to 3.4/10 from a historical average of 5.8/10, and the FXS Fed Sentiment Index, which fell by 3.09 points to 133.86, though it remains above the neutral threshold of 100, indicating overall hawkishness persists [1].
In currency markets, NZD/USD rebounded from a 17-month low to trade near 0.5625 during early European hours on Wednesday, while USD/CHF extended its losses for a second consecutive day, trading around 0.8320 during Asian hours [1][2]. The decline in the US Dollar was further supported by easing US bond yields, with the 10-year Treasury note yield falling more than 2 basis points to 5.215% and the 30-year yield down more than 3 basis points to 5.564% on Tuesday [1]. The Swiss 10-year government bond yield rose to near 0.56%, tracking the broader decline in global bond yields and falling oil prices after Russia agreed to release diesel supplies onto global markets [2].
Market participants are now focused on the upcoming US Consumer Price Index (CPI) inflation data for September, scheduled for release later on Wednesday, which is expected to show a year-over-year rise of 3.6%, up from 3.4% in August. Core CPI is projected to increase to 2.5% from 2.4% in the previous month [2]. The outcome of this data could influence the Federal Reserve’s monetary policy path and impact the US Dollar’s direction [1][2]. Additionally, attention will shift to the US Producer Price Index (PPI) and Retail Sales reports on Thursday [1]. Any signs of hotter inflation could boost the Greenback and act as a headwind for NZD/USD and USD/CHF in the near term [1].
On the technical front, NZD/USD remains under bearish pressure, trading below both the 20-period Bollinger simple moving average (SMA) and the 100-period SMA [1]. For USD/CHF, strategists at UOB Group maintain their view that the pair is in a range-trading phase, now expecting a narrower range of 0.8295/0.8365 over the coming 1–3 weeks, with a close above 0.8365 increasing the risk of a break above 0.8385 [2].
In Switzerland, inflation rose to a two-year high of 1% in September, mainly due to elevated energy prices, but remained within the Swiss National Bank’s (SNB) 0–2% target range. The SNB kept its policy rate at 0% in September, with Vice Chairman Martin stating that no rate adjustment is currently needed due to low and stable inflation and limited spillover risks. Most economists expect the policy rate to remain unchanged through 2027, though markets are pricing in a rate hike by year-end and roughly three hikes by the end of 2027 [2].
CONCLUSION
Dovish signals from Fed President Williams have weakened the US Dollar against both the New Zealand Dollar and Swiss Franc, with markets now awaiting key US inflation data for further direction. While technical and fundamental factors suggest continued range-bound or bearish pressure for USD pairs, upcoming CPI and PPI releases could shift sentiment and influence future Fed policy expectations.