- USD/CHF trades firmly near 0.7950 as the US Dollar holds Wednesday’s gains.
- Market sentiment turns risk-on as US-EU disputes cool down.
- SNB’s Schlegel warns of negative inflation prints this year.
The USD/CHF pair clings to Wednesday’s recovery move near 0.7950 during the late Asian trading session on Thursday. The Swiss Franc pair rebounded after correcting sharply in January 19-20 as the US Dollar (USD) attracted bids, following United States (US) President Donald Trump’s speech at the World Economic Forum (WEF) in Davos.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades firmly near Wednesday’s high around 98.80.
US President Trump confirmed that he will not call military action and tariff threats on European Union (EU) members to acquire Greenland. Trump also announced the removal of 10% tariffs imposed on several EU members and the United Kingdom (UK) after meeting with Secretary General of NATO, Mark Rutte, and added that they have reached a framework of a “future deal with respect to Greenland, and in fact, the entire Arctic Region”.
Receding US-EU geopolitical and trade tensions have boosted investors’ risk appetite, leading to a broad-based rally in global markets. S&P 500 futures trade higher during late Asian hours, extending strong upside on Wednesday.
Meanwhile, the Swiss Franc (CHF) trades broadly calm, but underperforming antipodeans, even as Swiss National Bank (SNB) Chairman Martin Schlegel has warned of negative inflation in the near term. Speaking at the WEF on Wednesday, Schlegel said that the possibility of “negative inflation prints this year” is high, but a few months of negative inflation “wouldn’t be a problem”.
