The USD/CHF pair is trading with mild gains near 0.8990 during Tuesday’s European session. As the year-end approaches, trading volumes are likely to thin out.
Support for the US Dollar
The Federal Reserve (Fed) projections have played a role in supporting the US Dollar. The Summary of Economic Projections, or the ‘dot-plot’, showed a slower pace of rate cuts than what traders had expected. It indicated a half-percentage point rate cut in 2025, while in September, a full percentage cut had been projected.
US Economic Data Updates
New Home Sales
Data from the Census Bureau on Monday revealed that the US New Home Sales jumped 5.9% to a seasonally adjusted annual rate of 664,000 in November. The reading for October was also revised higher, going from the previously reported 610,000 units to 627,000 units.
Durable Goods Orders
However, the Durable Goods Orders in the US declined by 1.1% in November to $285.1 billion. This followed a 0.8% increase reported in October, and it was weaker than the expectations of a 0.4% decline.
Swiss Franc and Geopolitical Factors
Geopolitical Tensions
On the Swiss front, traders will closely watch the developments regarding the escalating geopolitical tensions in the Middle East. Any signs of such risks could boost the safe-haven currency like the Swiss Franc (CHF).
Specific Geopolitical Events
Israel’s defence minister has confirmed that Israel killed Hamas’s political leader Ismail Haniyeh in Tehran in July and also warned that the military would “decapitate” the leadership of Yemen’s Houthi rebels, as reported by the BBC. On the other hand, Israeli Prime Minister Benjamin Netanyahu said some progress had been made towards agreeing a ceasefire in Gaza with Hamas, though he couldn’t give a timeline for when a deal would be reached. Such geopolitical situations could act as a headwind for the USD/CHF pair by strengthening the Swiss Franc and capping the upside for the pair.
In conclusion, the USD/CHF pair’s performance is being influenced by a combination of the Fed’s stance on interest rates, US economic data, and the ongoing geopolitical tensions that could impact the relative strength of the US Dollar and the Swiss Franc. Traders will continue to keep an eye on these factors as the trading continues in the holiday period.
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