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- USD/CHF falls as the US Dollar weakens on more Fed rate cuts in 2026.
- President Trump is expected to announce a nominee for Fed chair later in January.
- The safe-haven Swiss Franc remains supported amid elevated geopolitical tensions.
USD/CHF loses ground as the US Dollar (USD) weakens over expectations of two more Federal Reserve rate cuts in 2026. The pair is trading around 0.7920 during the Asian hours on Friday. The Fed delivered a 25-basis-point (bps) interest rate cut at the December 2025 meeting, bringing the target range to 3.50%–3.75%. The US central bank reduced a cumulative 75 bps of rate cuts in 2025 amid a cooling labor market and still-elevated inflation.
Markets are awaiting US President Donald Trump’s nomination of a new Fed chair to succeed Jerome Powell when his term ends in May, a move that could steer monetary policy toward lower interest rates. President Trump said earlier this week that the announcement would come “sometime in January.” National Economic Council Director Kevin Hassett is viewed as the frontrunner, though Trump has also shown interest in former Fed Governor Kevin Warsh. Other reported contenders include current Fed Governors Christopher Waller and Michelle Bowman, as well as BlackRock’s Rick Rieder.
However, the Federal Open Market Committee’s December Meeting Minutes suggested a divided policy outlook. Most participants felt it would likely be appropriate to pause further rate cuts if inflation continues to ease, while some officials argued for keeping rates unchanged for a period following three cuts in 2025 aimed at supporting a weakening labor market.
The USD/CHF pair edges higher as the safe-haven Swiss Franc (CHF) finds support amid heightened geopolitical tensions, fueled by recent exchanges of accusations between Russia and Ukraine over civilian attacks on New Year’s Day and persistent US–Venezuela friction.
Switzerland’s KOF Economic Indicator rose by 1.7 points to 103.4 in December, reaching its highest level since September 2024 and exceeding market expectations of 101.4. The improvement was most pronounced on the production side, with manufacturing-related indicators pointing to a more favorable outlook.
