USD/CHF hovers around 0.8000 as increased safe-haven interest boosts the Swiss Franc

USD/CHF Holds Steady Amid Geopolitical Uncertainty

During Friday's Asian trading session, the USD/CHF pair remains stable near 0.7990, following three consecutive days of gains. The upward momentum has paused as the Swiss Franc continues to benefit from its safe-haven status, driven by persistent geopolitical tensions. Additionally, Switzerland's 10-year government bond yield has climbed close to 0.30%.

Geopolitical Developments Impacting Markets

US President Donald Trump has issued a stern warning, stating that the United States will take decisive action if Iranian authorities resort to deadly force against demonstrators. This comes amid intensifying protests and rising global tensions. Investors are also monitoring potential US moves regarding Venezuela and heightened discussions about possible military intervention in Greenland.

Swiss Inflation and Central Bank Policy

Recent inflation figures from Switzerland have lessened the likelihood of the Swiss National Bank (SNB) lowering rates below zero. Consumer prices remained flat month-over-month in December, surpassing expectations of a slight decline after a 0.2% drop in November. On an annual basis, inflation edged up to 0.1%, in line with forecasts and higher than November's unchanged reading. This suggests that inflation for the fourth quarter is likely to meet the SNB's 0.1% target.

Minutes from the SNB's December meeting reveal that policymakers see no immediate need to adjust monetary policy, maintaining the key interest rate at 0%. They anticipate a gradual increase in inflation, note a brighter economic outlook following reductions in US tariffs, and express concerns about the risks to the financial system if rates were pushed further into negative territory.

US Dollar Outlook Ahead of NFP Data

USD/CHF could see further gains as the US Dollar finds support from investor caution ahead of the upcoming US Nonfarm Payrolls (NFP) report. This data release is expected to provide additional clarity on the labor market and influence the Federal Reserve’s policy direction. December's NFP is projected to show an increase of 60,000 jobs, slightly below November's 64,000. Should the report exceed expectations, it would likely bolster the US Dollar further.