The USD/CHF pair strengthened to near 0.9170 during the early European session on Monday, driven by a firm US Dollar (USD). The US employment report for December, which showed stronger-than-expected job growth, reinforced the Federal Reserve’s cautious stance, providing support for the USD/CHF pair. Investors are now looking ahead to the release of the US December Producer Price Index (PPI) data, due on Tuesday, for further market direction.
The Greenback extended its gains following the December jobs report, which exceeded expectations and reinforced the view that the Federal Reserve is likely to pause its rate-cutting cycle at its January meeting. According to the CME FedWatch tool, financial markets now expect the Fed to keep its benchmark interest rate in the 4.25%-4.50% range at its upcoming policy meeting. Since initiating its easing cycle in September 2024, the Fed has reduced its policy rate by 100 basis points.
On the Swiss side, economic uncertainties surrounding the policies of President-elect Donald Trump’s administration, along with escalating geopolitical tensions in the Middle East, are providing tailwinds for the Swiss Franc (CHF). Safe-haven flows into the CHF have been supported by continued Israeli strikes in Gaza and attacks reported in Lebanon, highlighting the risk-off sentiment in the market.
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