- During Friday’s early European session, the USD/CHF fluctuates upward to around 0.9045.
- Fed rate cut probabilities are dampened by US PPI inflation.
- Israel threatened to resume war unless Hamas freed the three hostages on Saturday.
The USD/CHF exchange rate rises to about 0.9045 in Friday’s early European session. The pair receives some support from the revived demand for the US dollar (USD). However, the USD/CHF rise may be limited by safe-haven flows in the face of uncertainty and geopolitical uncertainties.
Expectations that the US Federal Reserve (Fed) will maintain interest rates for a long time were strengthened by the US Producer Price Index (PPI), which was hotter than anticipated. Fed Chair Jerome Powell also emphasized that the Fed is not in a rush to lower interest rates because of the labor market’s ongoing strength and the economy’s steady expansion.
“Higher-for-longer interest rates is becoming the mantra again,” said Scott Anderson of BMO, underscoring the Fed’s increasing hesitancy about further rate decreases. The US Retail Sales report for January, which is published later on Friday, will be watched by traders. This could further strengthen the USD vs the CHF if the outcome is heated. In the meantime, the Swiss franc (CHF), a classic safe-haven currency, is expected to gain strength due to uncertainties and geopolitical concerns.
Although the Israeli government has warned that war will restart if the anticipated three captives are not freed on Saturday, it has maintained that it intends to adhere to the hostage-release schedule set forth in the cease-fire deal with Hamas.
What are the main drivers of the Swiss franc?
The official currency of Switzerland is the Swiss franc (CHF). With trading volumes well exceeding the size of the Swiss economy, it is one of the top ten most traded currencies in the world. The state of the nation’s economy, the Swiss National Bank’s (SNB) actions, and the general mood of the market all affect its value. The Swiss franc was fixed to the Euro (EUR) from 2011 to 2015. Market chaos resulted from the sudden removal of the peg, which caused the value of the Franc to rise by more than 20%. This event highlights how market volatility can impact sectors like prop firm tech, where rapid price movements influence trading strategies and risk management.