UPDATE: The USD/CHF currency pair is trading at 0.8050 on Thursday, showing little movement for the day, but remains under pressure as market anticipation for a Federal Reserve rate cut rises sharply. With expectations now at an alarming 85% for a 25-basis-point cut at the upcoming December meeting, the US Dollar faces significant downward pressure.
As the Thanksgiving holiday in the United States limits market activity, traders are closely monitoring the labor market. Recent data shows that initial jobless claims for the week ending November 22 rose to 216,000, which is below the expected 225,000. This indicates some resilience in the labor market, but the overall trend points to a gradual cooling, which investors have already factored in.
Despite a recent uptick in durable goods orders, the sentiment remains negative for the US Dollar. Analysts speculate that Kevin Hassett, known for his dovish views, may replace Jerome Powell as Fed Chair when his term concludes in May 2024, adding further strain to the Dollar’s outlook.
Market liquidity is particularly thin today due to the Thanksgiving holiday, which is reinforcing policy-driven moves across US assets. The US Dollar Index is stable at 99.57, unable to capitalize on stronger-than-expected data releases.
On the other hand, the Swiss National Bank is expected to maintain its policy rate at 0.00% potentially until 2027, creating a policy divergence that further weighs on the USD/CHF exchange rate.
Tomorrow, traders will be eyeing two critical economic indicators from Switzerland: the third-quarter Gross Domestic Product (GDP) and the KOF Leading Indicator. These releases could provide fresh insights into the Swiss economy and potentially impact the currency pair’s trajectory.
In summary, the USD/CHF remains entrenched in a market environment that is increasingly unfavorable to the US Dollar, dominated by Fed rate-cut expectations. With key Swiss data on the horizon, traders are urged to stay alert for potential volatility ahead.
