USD/CHF edges up above 0.7000 following negative Swiss CPI data

USD/CHF climbs back above 0.7700 but remains on track for a 0.5% weekly decline.
Negative Swiss CPI figures have added pressure on the Swissie.
Investors remain cautious on Friday, awaiting the release of January's US CPI data.

Guillermo Alcala FXStreet

The US Dollar (USD) posts moderate gains against the Swiss Franc (CHF) on Friday, returning to levels above 0.7700 to trade at 0.7714 at the time of writing. The pair, however, remains trapped within the last two days' trading range, and is on track for a 0.5% weekly loss.

The CHF drops against its main peers on Friday following negative inflation figures in Switzerland. Consumer Prices Index (CPI) data released on Friday has shown a 0.1% contraction in January, below expectations for a flat reading, while annual inflation remained steady at 0.1%, meeting the market consensus.

Pressure on the SNB to cut rates below zero

These figures add pressure on the Swiss National Bank to ease its monetary policy further, bringing the benchmark interest rate below the current 0% level, a measure that SNB President Martin Schlegel is reluctant to adopt. Nevertheless, Schlegel affirmed last week that inflation is the bank’s greater concern and that they will do everything they can to ensure price stability, which leaves all options open.

The US Dollar, on the other hand, is enjoying a mild tailwind on Friday, favoured by the risk-averse market mood amid the latest AI-induced reversal in equity markets.

Investors, however, remain reluctant to place large directional bets on the US Dollar, awaiting the release of the US CPI figures, due later on the day, aiming for further insight into the US Federal Reserve’s (Fed) monetary policy. US headline CPI inflation is expected to have remained steady at 0.3% in January, and to have eased to a 2.5% year-on-year rate, from 2.7% in December.

Economic Indicator

Consumer Price Index (MoM)

The Consumer Price Index (CPI), released by the Swiss Federal Statistical Office on a monthly basis, measures the change in prices of goods and services which are representative of the private households’ consumption in Switzerland. The CPI is the main indicator to measure inflation and changes in purchasing trends. The MoM figure compares the prices of goods in the reference month to the previous month. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by the Swiss Federal Statistical Office on a monthly basis, measures the change in prices of goods and services which are representative of the private households’ consumption in Switzerland. The CPI is the main indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.

AUD/USD remains below 0.7000 amid light trading

AUD/USD fills a modest bearish gap on Monday, but remains below 0.7000 in the Asian session amid holiday-thinned liquidity. The US Dollar attempts a bounce even as US bond yields pull back from multi-year highs, limiting the pair. Moreover, diminishing odds of another RBA rate hike in November cap the Aussie.

USD/JPY hovers above 158.00 amid Japan/ US holiday

USD/JPY extends its range-bound price action into a new week, trading above 158.00 as bulls remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. Meanwhile, softer US bond yields keep US Dollar bulls on the back foot and cap the pair's upside. However, geopolitical uncertainties could limit losses for the safe-haven buck amid thin liquidity due to a holiday in Japan and the US.

Gold remains vulnerable below $4,200 on Fed hike bets

Gold is under mild selling pressure on Monday, trading at around $4,170. The US Dollar advances modestly in thin trading, supported by bets that the Federal Reserve will hike rates at least one more time before year-end.

Bitcoin struggles as ETF outflows, geopolitical uncertainty weigh

Bitcoin hovers around $83,600 on Monday after a 3.1% correction last week. US-listed spot ETFs recorded an outflow of $681.10 million last week, snapping the three-week inflow streak. Geopolitical uncertainty and mixed signals keep investors cautious.

The week ahead: A critical week as earnings and CPI test market

The Oil price is relatively stable this morning, and US and European stock markets are poised to open higher, as risk sentiment shrugs off an escalation in the Middle East and concerns about rising bond yields.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?