The USD/CHF pair is experiencing slight increases, trading near 0.8010 in the early European session on Wednesday. The Greenback appreciates against the Swiss Franc following US inflation data that aligned closely with expectations. The upcoming release of the US Retail Sales and Producer Price Index reports is set to capture attention later on Wednesday. USD/CHF is experiencing slight increases, hovering around 0.8010 during the early European session on Wednesday. The US CPI inflation report reinforces the argument that the Fed is likely to maintain current interest rates in its upcoming meeting this month. Concerns regarding the Fed’s independence and ongoing geopolitical tensions may lead to increased safe-haven flows, thereby bolstering the Swiss Franc.
On Tuesday, data indicated that the US Consumer Price Index experienced a year-over-year increase of 2.7% in December. This figure came in at 2.7% in November and aligned with the expectations set forth. Meanwhile, core CPI, which excludes the more volatile food and energy components, increased by 2.6% in December, compared to a previous rise of 2.7%. In the latest monthly report, the headline CPI increased by 0.3%, while the core CPI saw a rise of 0.2%.
The US CPI inflation reports solid expectations that the US Federal Reserve will maintain its current stance later this month, despite significant pressure from the White House to reduce interest rates. This, in turn, strengthens the US Dollar against the CHF. Traders in Fed funds futures are indicating that an interest rate cut is unlikely to occur before June.
Conversely, uncertainty surrounding the Federal Reserve and geopolitical tensions may enhance the appeal of traditional safe-haven currencies like the CHF. Recently, US President Donald Trump issued a threat of criminal indictment against Fed Chair Jerome Powell. In other developments, the Iranian government has intensified its response to widespread protests, resulting in reports of hundreds of fatalities. Trump has consistently warned of potential intervention should the Islamic Republic take lethal action against protesters.