- USD/CHF softens to near 0.7650 in Thursday’s early European session.
- Unpredictable US trade policy, questions over the independence of the Fed, and geopolitical risks weigh on the US Dollar.
- Fed left the benchmark federal funds rate unchanged at its current range of 3.5% to 3.75% at the January meeting.
The USD/CHF pair attracts some sellers to around 0.7650 during the early European session on Thursday. Worries about the Federal Reserve (Fed) independence, concerns over another US government shutdown, and ongoing geopolitical tensions provide some support to the safe-haven currencies such as the Swiss Franc (CHF) against the Greenback. The Swiss December Trade Balance and US weekly Initial Jobless Claims will be released later in the day.
A partial U.S. government shutdown is increasingly likely this weekend as federal funding for certain agencies is set to expire after January 30. The New York Times reported on Wednesday that US President Donald Trump and Democratic Senator Chuck Schumer tried to reach a possible agreement to negotiate new restrictions on federal immigration agents.
Meanwhile, US aircraft carriers and supporting warships have arrived in the Middle East. Trump on Wednesday urged Iran to “come to the table” and negotiate a “fair and equitable deal,” or the next US attack would be far worse. Heightened tensions between the US and Iran could boost the safe-haven flows.
As widely expected, the Fed on Wednesday decided to leave interest rates unchanged, breaking a streak of three straight rate cuts amid uncertainty over the labor market and inflation. Fed Chair Jerome Powell said at a press conference that policymakers “see the current stance of monetary policy as appropriate to promote progress toward both our maximum employment and 2% inflation goals.” The cautious stance from the US central bank might help limit the USD’s losses in the near term.
