The USD/CHF currency pair maintains a stable position as traders await crucial economic data from both the United States and Switzerland. The Fed's cautious monetary policy stance and the potential for USD strength are countered by ongoing inflation concerns and the anticipation of Swiss economic indicators.
USD/CHF remains relatively stable following two consecutive days of gains, trading around 0.9070 during Thursday's Asian session. This slight decline is primarily attributed to the weakness in the US Dollar (USD), with the US Dollar Index (DXY) hovering slightly below the 108.00 mark. Market participants are eagerly awaiting the release of the US fourth-quarter Gross Domestic Product ( GDP ) growth data, scheduled for Thursday.
The consensus forecast anticipates a slowdown in annualized GDP growth to 2.6% from the previous 3.1%. Inflationary concerns persist, with the Q4 GDP Price Index projected to rise to 2.5%, up from 1.9%.Despite these factors, the downside for USD/CHF might be limited due to the potential for USD strengthening following the Federal Reserve's (Fed) cautious approach to monetary policy. As anticipated, the Fed maintained its overnight borrowing rate at 4.25%-4.50% during its January meeting on Wednesday, following three consecutive rate cuts since September 2024, totaling a one-percentage-point reduction. The Fed's hawkish stance was further reinforced by the removal of language suggesting confidence in inflation reaching its 2% target. Fed Chair Jerome Powell emphasized in the press conference that the central bank would require tangible progress on inflation or some weakness in the labor market before considering any policy changes.In Switzerland, the ZEW Survey Expectations for January increased to 17.7, reversing the previous month's decline to -20, according to data released on Wednesday. Traders are also anticipating the Swiss Trade Balance for December and the KOF Leading Indicator for January, both scheduled for release on Thursday. These economic releases from Switzerland may contribute to fluctuations in the value of the Swiss Franc (CHF)
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