The USD/CHF pair remains supported near the 0.7970 level during late Asian trading on Thursday, extending gains recorded over the past two sessions. The pair trades on a firm footing as the US Dollar continues to draw strength from upbeat US economic data, particularly the stronger-than-expected ISM Services PMI for December.
At the time of writing, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is holding close to 98.70, reflecting sustained demand for the Dollar.
US services data reinforces dollar strength
Data released on Wednesday showed that the ISM Services Purchasing Managers’ Index rose to 54.4 in December, up from 52.6 in November and well above market expectations of 52.3. The services sector, which represents roughly two-thirds of the US economy, continues to signal resilience, underscoring the strength of technology-driven economic activity.
According to analysts at ING, the robust Services PMI reading may complicate the Federal Reserve’s path toward monetary easing. While markets are currently pricing in at least two 25-basis-point rate cuts later this year, as reflected by the CME FedWatch tool, persistent economic strength could temper expectations for aggressive policy loosening.
Focus shifts to US nonfarm payrolls
Looking ahead, the US Dollar’s next key catalyst will be Friday’s release of the December Nonfarm Payrolls (NFP) report. The data will provide fresh insight into labor market conditions and is likely to play a pivotal role in shaping near-term expectations for the Fed’s policy trajectory.
Any signs of continued labor market tightness could reinforce the Dollar’s bid, while softer readings may revive bets on faster rate cuts.
Swiss franc awaits CPI figures
Meanwhile, the Swiss Franc is trading in a subdued manner ahead of Switzerland’s Consumer Price Index (CPI) release scheduled for 07:30 GMT. Annual inflation is expected to edge up to 0.1% year-on-year in December from 0% previously, while monthly inflation is forecast to decline by 0.1%, following a 0.2% drop in November.
Should the data align with expectations, the Swiss National Bank is likely to maintain its dovish policy stance for an extended period, limiting upside potential for the Franc and keeping USD/CHF supported in the near term.
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