The USD/CHF currency pair is trading with modest losses around 0.9020 as the cautious sentiment dominates the early European session on Monday. Trading volumes are expected to remain light this week due to the ongoing holiday period, with traders looking ahead to the New Year. Attention will shift to Friday’s US ISM Manufacturing Purchasing Managers Index (PMI) for December, which is likely to be a key market focus.
In the US, ongoing inflation concerns and the potential impact of President-elect Donald Trump’s policies on rising inflation have prompted the Federal Reserve (Fed) to revise its interest rate projections. The Fed signaled that it will likely implement rate cuts more gradually in 2025 compared to previous forecasts from September. Officials now expect two rate cuts next year, down from the four initially predicted. These revised expectations could provide support for the US Dollar (USD) against the Swiss Franc (CHF).
Conversely, the Swiss Franc may benefit from safe-haven flows due to ongoing geopolitical tensions and economic uncertainties. The Israeli military announced a new operation in the Beit Hanoun area on Saturday, and rocket fire into Israel resumed on Sunday despite the ongoing military action. This volatility could further boost demand for the CHF as a safe-haven asset.
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