USD/CHF Strengthens To Lows As Traders Prepare For US Retail Sales Release
The USD/CHF pair strengthened to around 0.9045 during the early European session on Friday (2/14). Renewed US Dollar (USD) demand extended some support to the pair. However, safe-haven flows amid uncertainties and geopolitical risks might cap gains for USD/CHF.
A higher-than-expected US Producer Price Index (PPI) reinforced expectations that the US Federal Reserve (Fed) will keep interest rates on hold for an extended period. Moreover, Fed Chair Jerome Powell highlighted that the Fed is in no hurry to cut interest rates due to continued strength in the labor market and solid economic growth.
BMO’s Scott Anderson described the Fed’s growing caution about future rate cuts, noting that “higher rates for longer is back in the frame.” Traders will be keeping an eye on the release of US Retail Sales for January, due on Friday. A better reading could further boost the USD against the Swiss Franc (CHF).
Data released by the Swiss Federal Statistics Office on Thursday showed that Swiss Consumer Price Index (CPI) inflation eased to 0.4% year-on-year in January from 0.6% in December. The reading was in line with market expectations and the lowest level since April 2021. On a monthly basis, the CPI fell by 0.1%, maintaining the same pace as the previous period.
Meanwhile, geopolitical uncertainty and concerns are likely to boost traditional safe-haven currencies such as the Swiss Franc (CHF). The Israeli government has said it plans to stick to the hostage release schedule agreed in the ceasefire agreement with Hamas, but has warned that if the three expected hostages are not freed by Saturday, war will resume.
Source: Bloomberg
