During the early European trading session on Monday, the USD/CHF pair is trading with a slight downturn, hovering near 0.9020. With another holiday-shortened week ahead, trading volumes are expected to be thin as the market inches closer to the New Year holiday. Traders have their eyes set on the US ISM Manufacturing Purchasing Managers Index (PMI) for December, due out on Friday.
The US Federal Reserve’s (Fed) recent signals have implications for the pair. Given the elevated inflation in the US and concerns that President-elect Donald Trump’s policies may stoke it further, the Fed indicated it will likely cut rates more slowly in 2025 compared to its September projections. Fed officials now foresee two rate cuts next year, down from the four they had anticipated three months ago. These rising expectations of fewer rate cuts could shore up the US dollar against the Swiss franc.
However, the economic outlook is clouded by uncertainty, and geopolitical tensions in the Middle East are adding to the unease. The Swiss franc, a safe-haven currency, stands to gain from such conditions. On Saturday, the Israeli military announced a new operation in the Beit Hanoun area, and despite this heavy operation, rocket shooting into Israel resumed on Sunday, as reported by Reuters. This ongoing unrest may trigger safe-haven flows that could put upward pressure on the CHF, keeping the USD/CHF pair below 0.9050.
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