During the early European session, the USD/CHF pair has been trading steadily above the 0.8800 mark, with market participants eagerly awaiting cues from the upcoming US and Swiss Gross Domestic Product (GDP) data for the fourth quarter (Q4) to discern the pair’s future direction. As of now, USD/CHF hovers around 0.8811, maintaining its position from the start of the day.
Analysts are closely eyeing the anticipated annualized US GDP growth figure, expected to hold firm at 3.3%, seeking insights into the economic landscape. Recent indicators, including US inflation data from January and cautious remarks from Federal Reserve (Fed) officials, have prompted a recalibration of market expectations on interest rate cuts. Previously anticipating six cuts in December, investors now foresee three rate cuts in 2024.
Thursday’s release of the US Personal Consumption Expenditures Price Index (Core PCE), the Fed’s preferred gauge of inflation, is poised to offer valuable insights into the trajectory of inflationary pressures. The outcome may influence the USD’s performance against its counterparts, with stronger data potentially buoying the Greenback.
Against the backdrop of rising geopolitical tensions in the Red Sea, the United States and Britain have taken decisive action by targeting 18 Houthi installations in Yemen. This response comes amidst a surge in attacks on ships in the Red Sea and Gulf of Aden by the Iran-backed militia group. The recent missile strike on a cargo tanker has escalated concerns, potentially acting as a headwind for the USD/CHF pair and bolstering the appeal of the safe-haven Swiss Franc (CHF).
Looking ahead, the market’s focus shifts to key economic indicators. Tuesday will witness the release of US Durable Goods Orders and Consumer Confidence data. On Wednesday, attention turns to the US GDP growth numbers for Q4. The week’s highlights on Thursday include the Swiss GDP report and the US Q4 Core Personal Consumption Expenditures Price Index (Core PCE), providing investors with further insights into the economic landscape.
