The USD/CHF pair is trading within a narrow range around the 0.9120 mark during the Asian session on Friday, consolidating its gains from the past three days. The pair remains near its highest level since May, with traders adopting a cautious stance ahead of the release of crucial US employment data.
The upcoming Nonfarm Payrolls (NFP) report is expected to show a slowdown in job growth, with the US economy likely adding 160K jobs in December, down from 227K in the previous month. The Unemployment Rate is projected to remain steady at 4.2%. Wage growth data will also be closely watched, as it could significantly influence near-term US Dollar (USD) dynamics and provide further direction for the USD/CHF pair.
Fed’s Rate Outlook and SNB Expectations Support USD/CHF
As traders await these key economic indicators, expectations for slower interest rate cuts by the Federal Reserve (Fed) continue to provide support for the US Dollar, keeping US Treasury bond yields elevated. This, in turn, helps the USD maintain its strength near a two-week high.
Meanwhile, the Swiss National Bank (SNB) is expected to lower interest rates further in 2025, especially following a decline in Swiss consumer inflation in December. These expectations, alongside the overall market sentiment, continue to act in favor of the USD/CHF pair, suggesting potential for additional gains in the near term.
Geopolitical Risks and Global Tensions Weigh on Market Sentiment
Despite the favorable outlook for the USD/CHF pair, broader market concerns, including US President Donald Trump’s tariff policies, the ongoing Russia-Ukraine war, and tensions in the Middle East, are keeping investors on edge. These geopolitical risks continue to dampen market sentiment, resulting in a weaker tone across equity markets. Such factors support demand for the safe-haven Swiss Franc (CHF), potentially limiting upside momentum for the USD/CHF pair and warranting caution for bullish traders.
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