Swiss Franc gains slightly while the US Dollar takes a breather following a surge fueled by economic data

Swiss Franc Strengthens as US Dollar Retreats

On Friday, the Swiss Franc (CHF) gained ground against the US Dollar (USD), as the Greenback lost momentum following a data-fueled surge that had recently driven it to its highest level in over a month. At the latest update, the USD/CHF pair hovered near 0.8015, marking a decline of approximately 0.25% for the day.

US Economic Indicators Remain Robust

Recent US economic reports have highlighted the resilience of the American economy. Initial jobless claims for the week ending January 10 dropped to 198,000, outperforming the anticipated 215,000. The four-week average also decreased to 205,000 from 211,500, signaling ongoing strength in the labor market.

Manufacturing activity showed improvement as well, with the Empire State index climbing to 7.7 from -3.7 and the Philadelphia Fed index advancing to 12.6 from -8.8. Additionally, retail sales in November rose by 0.6% month-over-month, rebounding from a previous 0.1% decline and surpassing expectations of a 0.4% increase, reflecting solid consumer spending.

Fed Policy Outlook and Market Expectations

The string of positive US data, coupled with assertive comments from Federal Reserve officials, has bolstered the view that the central bank can maintain its current stance on monetary policy for now. This has supported the US Dollar, which is on track for its third consecutive weekly advance.

The US Dollar Index (DXY), which measures the currency against six major peers, is currently around 99.27, down about 0.08% for the day.

Market participants are now fully anticipating that the Fed will leave interest rates unchanged at its upcoming January 27-28 meeting. Nonetheless, investors still expect the possibility of two rate reductions later in the year.

Focus Shifts to Central Bank Commentary

With a relatively quiet US economic calendar ahead, attention is turning to upcoming statements from central bank officials. Traders will be watching for insights from Fed Governor Michelle Bowman and Vice Chair Philip Jefferson, seeking clues about the future direction of monetary policy and the policy outlook.

Swiss National Bank Maintains Steady Course

Meanwhile, the Swiss National Bank (SNB) is widely anticipated to keep its policy rate steady at 0% for the time being, as inflation in Switzerland remains low and under control.

Minutes from the SNB’s December meeting confirmed this approach, with the Governing Board stating there is currently no need for policy adjustments, and that neither tightening nor loosening monetary policy would be suitable at this stage.