The USD/CHF pair is experiencing mild losses, trading around 0.8655 during the early European session on Friday. Expectations that the U.S. Federal Reserve (Fed) will adopt a less aggressive approach to rate cuts may limit further downside in the near term, with traders awaiting U.S. housing data and Fed commentary later in the day.
Rising demand for the U.S. dollar, driven by easing fears of outsized Fed rate cuts and positive U.S. economic indicators, could support the pair. Recent data from the U.S. Census Bureau showed Retail Sales rose by 0.4% month-over-month in September, surpassing the August figure of 0.1% and the consensus estimate of 0.3%. Additionally, Initial Jobless Claims for the week ending October 11 fell to 241,000, lower than expectations and the previous week’s revised figure of 260,000.
The U.S. Dollar Index (DXY), which gauges the dollar against six major currencies, is trading near its highest level since August 2, around 103.65. Goldman Sachs analysts anticipate consecutive 25 basis point rate cuts from November 2024 through June 2025 as recession fears diminish, with the CME FedWatch Tool indicating a 90.3% probability of a 25 basis point cut next month.
On the Swiss side, ongoing geopolitical tensions in the Middle East may enhance safe-haven demand for the Swiss Franc (CHF). Notably, Israel reported the assassination of Hamas commander Yahya Sinwar, with Prime Minister Benjamin Netanyahu declaring it as a significant step against Hamas, stating that military actions will continue until hostages are returned.
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