The USD/CHF pair gains traction to around 0.9115 during the early European trading hours on Thursday, bolstered by the stronger US Dollar (USD). The cautious stance of the Federal Reserve (Fed) and solid US economic data provide some support to the pair. Traders will monitor the Fedspeak on Thursday for more cues about the US interest rate outlook this year.
Investors scaled back rate cut bets, with pricing a less than 50% chance the Fed cuts rates ahead of its June meeting, according to the CME FedWatch Tool. "With the Federal Reserve expected to cut rates less than most other major central banks, expected interest rate differentials favor the greenback," noted Blake Millard, director of investments at Sandbox Financial Partners.
According to minutes of the Fed's December meeting released on Wednesday, policymakers suggested that the process could take longer than previously anticipated due to recent hotter-than-expected readings on inflation and the effects of potential changes in trade and immigration policy.
Switzerland's inflation rate edged down in December 2024, reinforcing the Swiss central bank's (SNB) decision to cut more interest rates this year. The country's Consumer Price Index (CPI) rose 0.6% YoY in December, compared to 0.7% seen in November, matching the expectations. "Another interest rate cut by the SNB in March is now virtually certain," noted GianLuigi Mandruzzato, an economist at EFG Bank. The expectations for another
interest rate reduction by the SNB could weigh on the Swiss Franc (CHF) against the Greenback in the near term.
On the other hand, the persistent geopolitical tensions in the Middle East and the ongoing Russia-Ukraine war could boost the safe-haven flows, benefitting the CHF. The local news agency, Aljazeera, reported that Israel's attack on Gaza has continued overnight, including a strike on a home in the Nuseirat refugee camp that killed two people. One of the victims was a child.(Cay) Newsmaker23
Source: Fxstreet
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