USD/CHF Weakens, Swiss Franc Benefiting from Global Concerns
The USD/CHF currency pair weakened for the second consecutive day, trading around 0.7970 in Asian trading on Tuesday. This decline was driven by demand for the Swiss Franc (CHF) as a safe-haven asset amid geopolitical tensions and market concerns over the independence of the US Federal Reserve (Fed).
Global tensions escalated after US President Donald Trump said that Iran's leadership contacted him for negotiations following threats of military action, while anti-government protests in the country continued to escalate. Trump's statement that the US "may have to act before the meeting" added to geopolitical uncertainty, prompting investors to seek refuge in the CHF.
In addition to geopolitical factors, market concerns also arose over the Fed's independence after federal prosecutors threatened to indict Fed Chairman Jerome Powell over his testimony to Congress regarding building renovations. Powell called this move an attempt to weaken the central bank, triggering capital flows into safe-haven assets, including the Swiss Franc.
However, the decline in USD/CHF is expected to be limited as the US Dollar (USD) remains strong ahead of the release of December's CPI data, which could provide clues to the Fed's next policy direction. The market currently expects two Fed rate cuts this year, but the possibility of a high inflation surprise could hold back easing, with a 95% probability that the Fed will keep rates unchanged at its next meeting in late January. (az)
Source: Newsmaker.id
