- USD/CHF may regain ground as the US Dollar Index may further advance on increasing cautious tone surrounding the Fed outlook.
- CME FedWatch shows a 95% probability the Fed will keep rates unchanged at January’s meeting.
- The safe-haven Swiss Franc could come under pressure as concerns over Iran and Fed independence ease.
USD/CHF pares its recent gains from the previous session, trading around 0.8020 during the Asian hours on Friday. The downside of the pair could be restrained as the US Dollar (USD) may regain its ground amid rising cautious sentiment surrounding the Federal Reserve (Fed) policy outlook.
Thursday’s US Initial Jobless Claims data reinforced the likelihood that the Fed will keep interest rates on hold for the coming months. According to the CME Group’s FedWatch tool, Fed funds futures continue to price in about a 95% probability that the US central bank will keep rates unchanged at its January 27–28 meeting.
Fed funds futures have pushed expectations for the next rate cut back to June, reflecting stronger labor market conditions and policymakers’ concerns over sticky inflation. Traders are likely to look for further direction from the US December Industrial Production data and comments from Federal Reserve (Fed) officials later in the day.
Data from the US Department of Labor (DOL) showed Initial Jobless Claims unexpectedly fell to 198K in the week ended January 10, below market expectations of 215K and down from the prior week’s revised 207K. The data confirmed that layoffs remain limited and that the labor market is holding up despite an extended period of high borrowing costs.
The safe-haven Swiss Franc (CHF) may face challenges against the US Dollar amid easing concerns over Iran and Fed independence. Market sentiment improved after US President Donald Trump said he has no plans to remove Fed Chair Jerome Powell despite reported Justice Department indictment threats and signalled a possible delay in action on Iran.
