USD/CHF pair extends its decline to around 0.8990 during the early European session, pressured by the weaker US Dollar (USD). The Federal Reserve (Fed) Patrick Harker and Michelle Bowman are set to speak later on Monday. On Tuesday, the Swiss Industrial Production will be released.
US Retail Sales dropped by the most in nearly two years in January, weighing on the Greenback. Data released by the US Census Bureau on Friday showed that US Retail Sales dropped by 0.9% in January versus a 0.7% increase (revised from 0.4%) prior This figure came in weaker than the estimation for a decrease of 0.1%. Traders raised bets that the Fed would cut interest rates again as soon as June.
Meanwhile, US Industrial Production rose by 0.5% MoM in January, compared to 1.0% (revised from 0.9%) in December. This reading came in better than the estimation of a 0.3% rise.
Trump administration officials are preparing to meet with Russian officials on Tuesday in Saudi Arabia to discuss a possible agreement on ending the war in Ukraine. If talks between U.S. and Russian officials improve the odds of a peace deal being reached that ends the war, safe-haven buying demand may diminish. However, the uncertainty and geopolitical concerns are likely to boost the Swiss Franc (CHF).
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc's (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank's currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Source: Fxstreet
