The Swiss franc rose in the European market on Thursday against a basket of global currencies, extending gains for a third consecutive session against the US dollar, supported by weakness in the greenback as bets increased on a Federal Reserve rate cut in September.

Renewed global inflation pressures are weighing on policymakers at the Swiss National Bank, reducing the likelihood of a rate cut in September. To reprice those odds, investors are awaiting Switzerlands second-quarter GDP figures due later today.

Price Overview

The US dollar fell 0.2% against the Swiss franc to 0.8004, from the opening level of 0.8020, recording a high of 0.8026.

The franc ended Wednesday up about 0.15% against the dollar, its second consecutive daily gain.

US Dollar

The dollar index fell by about 0.15% on Thursday, extending losses for a third straight session, reflecting continued weakness of the greenback against a basket of major and minor currencies.

The decline came as the US 10-year Treasury yield dropped to a two-week low, with traders increasingly pricing in a Fed rate cut next month.

Federal Reserve member John Williams noted that the September meeting would be open to a rate cut decision. Williams said: The risks are more balancedwe just have to wait and see how the data evolves.

Traders currently price about an 87% probability of a 25-basis-point Fed cut next month, with cumulative easing of 56 basis points expected by year-end.

Swiss Interest Rates

Recent data from Europe, the UK, and the US showed renewed inflationary pressures, suggesting inflation in Switzerland may also pick up again, which could delay further monetary easing by the Swiss National Bank.

Market pricing currently places the odds of a Swiss rate cut in September below 20%.

Swiss Economy

To reprice these expectations, investors are awaiting Switzerlands Q2 GDP data due later today, with forecasts pointing to 0.1% growth versus 0.5% in Q1.

Outlook for the Swiss Franc

At Economies.com, we expect the franc to continue strengthening against the US dollar if Swiss GDP data come in better than market forecasts.