Warsh Boosts Dollar Sentiment, USD/CHF Remains in the Green Zone
The USD/CHF pair remained near 0.7730 during the European session on Monday (February 2), continuing the gains it has made since Friday. Its movement has tended to be stable as the US dollar remains supported by sentiment following the nomination of Kevin Warsh as the next Federal Reserve Chair.
The dollar itself still maintains momentum, although its movement has begun to calm down. The US Dollar Index (DXY) was recorded moving flat near a weekly high of 97.33, indicating that demand for the greenback has not completely subsided after the previous surge.
The main trigger came from Friday's announcement: President Donald Trump named Warsh as his choice to lead the Fed. The market interpreted Warsh as a figure who tends to favor a strong dollar and is not aggressive in cutting interest rates—thus strengthening expectations of higher interest rates for longer and providing a cushion for the USD.
However, market participants began to hold back as the next focus turned to US employment data. Friday's January Nonfarm Payrolls (NFP) release is seen as crucial for gauging the strength of the US economy and the Fed's room to shift policy. Currently, the market still expects the Fed to hold interest rates at its March meeting, according to the CME FedWatch tool.
Before the NFP, close attention will be paid to the US ISM Manufacturing PMI, released Monday at 15:00 GMT. Consensus expects the index to remain in contraction, but improve to 48.3 from 47.9 in December—a figure that could influence the dollar's movement in the short term.
Meanwhile, the Swiss franc has remained relatively stable amidst the risk-averse market mood. The combination of a still-strong dollar and a defensive CHF has kept USD/CHF moving more orderly today—the market appears to be awaiting the next data catalyst to determine its future direction.
Source: Newsmaker.id
