Anna 
During the Asian session on Wednesday, USD/CHF displayed a steady performance around 0.8520, showing resilience after a session of profit-taking. The U.S. Dollar Index (DXY) continues to hold above 102.50, and U.S. bond yields remain stable, with the 2-year and 10-year yields standing at 4.35% and 4.02%, respectively.
Earlier in the week, Atlanta Fed President Raphael W. Bostic introduced an element of uncertainty by suggesting a potential rate cut by the end of 2024. This sentiment exerted downward pressure on the U.S. dollar as Bostic highlighted a more substantial decline in inflation than initially anticipated, projecting two quarters of rate cuts by the close of 2024.
Despite this, a recent shift to risk-off sentiment in the market prompted investors to revert to the U.S. dollar, offering upward support for the USD/CHF pair. The upcoming release of U.S. Consumer Price Index (CPI) data for December on Thursday adds to the market’s cautious outlook.
Contrastingly, positive Swiss economic data on Monday contributed to gains for the Swiss franc (CHF). The Consumer Price Index (year-on-year) expanded to 1.7% in December from 1.4%, while actual retail sales surpassed expectations with a 0.7% rise compared to an anticipated flat 0.0% increase. On Tuesday, the seasonally adjusted unemployment rate in Switzerland edged up to 2.2% from 2.1% previously.
In addition to economic factors, the Swiss National Bank (SNB) foresees losses of approximately CHF 3 billion for the previous year, driven by a pronounced strengthening of the Swiss franc (CHF), offsetting gains in the bank’s foreign-currency equity and bond portfolio. The interplay of these factors creates a dynamic landscape for USD/CHF as it navigates through evolving market conditions.
