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IPC Index — Mexico Market- USD/CHF gains momentum to around 0.7685 in Friday’s early European session.
- Democrats and the White House struck a deal to avert a partial government shutdown.
- Trump says the nominee for the next Fed Chair will be unveiled on Friday.
The USD/CHF pair rebounds to near 0.7685 during the early European session on Friday, bolstered by renewed US Dollar (USD) demand. US President Donald Trump and Senate Democrats struck a deal to avoid a US government shutdown, supporting the Greenback against the Swiss Franc (CHF). The US December Producer Price Index (PPI) data will be in the spotlight later on Friday.
The US Senate could vote as soon as Thursday night to approve a government funding package after Democrats reached a deal with US President Donald Trump to strip out the full-year spending bill for the Department of Homeland Security (DHS). The USD edges higher following this headline. However, it is unclear how quickly the House can and will process those funding bills after the Senate passes them. The shutdown deadline is midnight on Friday.
Traders will closely monitor the developments surrounding Trump’s Fed Chair pick on Friday. The US president said late Thursday that he will announce his choice to replace Jerome Powell as the chair of the Federal Reserve (Fed) on Friday morning. Former Fed Governor Kevin Warsh is increasingly seen as the frontrunner following a reported meeting with Trump at the White House.
On the other hand, renewed concerns over political uncertainty in the United States (US) or rising geopolitical tensions could boost safe-haven currencies such as the Swiss Franc and create a headwind for the pair.
The Swiss National Bank (SNB) Chairman Martin Schlegel notes that if the CHF continues to appreciate, it could increase pressure on the central bank. Analysts believe the SNB is likely to adopt a cautious approach and wait for new inflation projections before considering any policy adjustment, while ruling out a return to negative rates for now.
