The USD/CHF pair climbs to around 0.9115, fueled by a cautious approach to rate cuts signaled by the Federal Reserve (Fed) and slowing inflation in Switzerland. Traders anticipate less aggressive rate cuts from the Fed, supporting the US Dollar. Meanwhile, Switzerland's December inflation data reinforces expectations for further interest rate reductions by the Swiss National Bank (SNB), potentially weighing on the Swiss Franc.
USD/CHF drifts higher to around 0.9115 in Thursday’s early European session. Fed Minutes signalled a cautious approach to rate cuts, supporting the USD. Swissinflation slowed in December, supporting the case for more easing in interest rates by the SNB. The USD/CHF pair gains traction to around 0.9115 during the early European trading hours on Thursday, bolstered by the stronger US Dollar . The cautious stance of the Federal Reserve and solid US economic data provide some support to the pair.
The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone. Why is the Swiss Franc considered a safe-haven currency? The Swiss Franc is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress.
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