The USD/CHF pair weakens to near 0.9110, snapping the fifth-day winning streak during the early European session on Thursday. The concerns about US President Donald Trump's trade tariff and weakening of the US Dollar (USD) drag the pair lower. Investors brace for the US weekly Initial Jobless Claims and Producer Price Index (PPI), which are due later on Thursday.
Fed Chair Jerome Powell on Wednesday emphasized that the central bank is in no rush to cut interest rates during a second congressional hearing this week but said that there has been "great progress" on inflation. The USD weakens as traders took profits and evaluated whether January's inflation report was an anomaly and unlikely to signal a larger trend toward higher prices.
Data released by the US Bureau of Labor Statistics on Wednesday showed that the Consumer Price Index (CPI) rose 3.0% year-on-year in January versus 2.9% prior. This reading came in hotter than the 2.9% expected. The core CPI, which excludes food and energy costs, climbed 3.3% in January, compared to the previous reading of 3.2% and the estimation of 3.1%. On a monthly basis, the headline CPI inflation jumped to 0.5% in January from 0.4% in December, while the core CPI increased to 0.4% in January from 0.2% recorded in December.
On the Swiss front, the escalating geopolitical tensions in the Middle East could boost the Swiss Franc (CHF), a safe-haven currency. Israel's Prime Minister Benjamin Netanyahu said late Tuesday that the ceasefire will be over and Israel will resume "intense fighting" in Gaza if Hamas doesn't release "our hostages" by Saturday noon.
USD/CHF softens to around 0.9110 in Thursday's early European session.
The US CPI inflation came in hotter than expected in January.
The rising Middle East geopolitical tensions could boost the safe-haven flows, supporting the Swiss Franc.
The Swiss Franc (CHF) is Switzerland's official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country's economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc's value, causing a turmoil in markets. Even though the peg isn't in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
Source: fxstreet
