- USD/CHF appreciates as the US Dollar receives support from FOMC Minutes signaling a pause in rate cuts.
- CME FedWatch shows an 85.1% chance of rates staying unchanged in January, up from 83.4% earlier.
- Swiss KOF Economic Indicator rose 1.7 points to 103.4 in December, beating expectations and hitting a September 2024 high.
USD/CHF extends its winning streak for the fourth consecutive day, trading around 0.7930 during the early European hours on Wednesday. The pair appreciates as the US Dollar continues to gain ground after the release of the Federal Open Market Committee (FOMC) December Meeting Minutes on Tuesday.
FOMC Minutes indicated a deeply divided committee, with most participants judging that it would likely be appropriate to stand on further rate cuts if inflation declined over time. Meanwhile, some Fed officials said it might be best to leave rates unchanged for a while after the committee made three rate reductions this year to support the weakening labor market.
The CME FedWatch tool shows an 85.1% probability of rates being held at the Fed’s January meeting, up from 83.4% a day earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 14.9% from 16.6% a day ago.
The US Dollar may lose ground amid expectations of two additional Federal Reserve rate cuts in 2026, along with concerns over fiscal deficits and the Fed’s independence. Traders are also closely watching the appointment of a new Fed Chair, with Trump expected to name Jerome Powell’s successor early next year.
Switzerland’s KOF Economic Indicator increased by 1.7 points to 103.4 in December, marking its highest reading since September 2024 and surpassing market expectations of 101.4. The improvement is most pronounced on the production side, where manufacturing-related indicator bundles point to a more favorable outlook.
The safe-haven demand for the Swiss franc (CHF) could rise amid heightened geopolitical tensions, driven by uncertainty over a potential Russia–Ukraine peace deal, renewed tensions in the Middle East, and frictions between the US and Venezuela.
