The USD/CHF pair fell to around 0.8815 during the early European session on Friday, pressured by a broadly weaker US Dollar (USD). Investors are now awaiting Switzerland’s third-quarter (Q3) Gross Domestic Product (GDP) data, due later in the day, which could provide further insights into the health of the Swiss economy.
US Dollar Weakens Ahead of Long Weekend
The US Dollar is experiencing a retreat as traders engage in profit-taking ahead of the extended Thanksgiving weekend. While recent US economic data has been encouraging, supporting expectations of gradual rate cuts from the Federal Reserve, a cautious Fed stance keeps the USD on the defensive. Minutes from the Federal Open Market Committee’s (FOMC) meeting on Tuesday indicated that Fed officials expect interest rate cuts, but at a slow pace, as inflation eases and the labor market remains resilient.
Focus on Swiss GDP
Switzerland’s Q3 GDP report will take center stage on Friday, with the Swiss economy projected to expand by 0.4% quarter-on-quarter, down from 0.7% growth in Q2. On an annual basis, Swiss GDP is expected to remain steady at 1.8%. A weaker-than-anticipated result could weigh on the Swiss Franc (CHF), potentially offering support to the USD/CHF pair.
Geopolitical Tensions and Safe-Haven Flows
Meanwhile, escalating geopolitical tensions continue to play a role in currency movements. On Thursday, Russia launched its second major attack on Ukraine’s energy infrastructure this month, causing widespread power cuts across the country. Any further escalation in the Russia-Ukraine conflict could drive investors toward safe-haven currencies like the Swiss Franc, providing upward momentum for CHF against the US Dollar.
As markets await key economic data and monitor global developments, the USD/CHF pair remains susceptible to shifts in both the US Dollar’s outlook and broader risk sentiment.
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