The USD/CHF pair retreated below the 0.7950 mark during Asian trading on Monday, easing to around 0.7940 as the US Dollar struggled to extend gains ahead of key macroeconomic data. Market participants remain cautious ahead of Tuesday’s release of the US annualized Gross Domestic Product (GDP) figures for the third quarter, which could provide fresh direction for the Greenback.
The US Dollar may find some support from a cautious tone surrounding the Federal Reserve’s policy outlook. Cleveland Fed President Beth Hammack said on Sunday that monetary policy is well-positioned for a pause, allowing policymakers to assess the economic impact of the cumulative 75 basis points (bps) of rate cuts during the first quarter, according to Bloomberg.
Interest rate expectations continue to point toward a prolonged pause. The CME FedWatch tool shows a 79.0% probability that the Fed will keep rates unchanged at its January meeting, up from 75.6% a week earlier. At the same time, the probability of a 25-bps rate cut has declined to 21.0%, reflecting a more cautious stance among traders.
However, political rhetoric has added uncertainty to the outlook. US President Donald Trump said last week that the next Chair of the Federal Reserve would favor substantially lower interest rates. Fed Governor Christopher Waller, who is reportedly under consideration for the role, reinforced his dovish bias, stating that policymakers can afford to ease policy gradually as inflation remains above target and there is no urgency to rush toward lower rates.
On the Swiss front, traders are looking ahead to the release of the Swiss ZEW Expectations survey for December on Tuesday, which is expected to provide fresh insight into business sentiment and employment conditions. The data may also help shape expectations for the Swiss National Bank’s (SNB) policy path, although a return to negative interest rates is widely viewed as unlikely due to potential adverse effects on savers and pension funds.
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