USD/CHF falls toward 0.8950 after pulling back from five-month highs

USD/CHF retreats after hitting its five-month high at 0.9021 on Thursday.
The Fed’s ‘dot-plot’ suggested only two rate cuts in 2025.
The Swiss trade surplus narrowed to 5,424 million in November, down from the previous surplus of 8,025 million.

Akhtar Faruqui FXStreet

USD/CHF edges lower following Switzerland’s trade balance data released on Thursday. The pair trades around 0.8970 during the European hours after pulling back from five-month high at 0.9021.

Additionally, the USD/CHF appreciated as the US Dollar (USD) strengthened following the Federal Reserve’s (Fed) hawkish 25 basis point (bps) rate cut at its December meeting, bringing the benchmark lending rate to a range of 4.25%-4.50%, marking a two-year low.

The US Dollar Index (DXY) reached 108.28, the highest level not seen since November 2022, on Thursday as the Fed’s Summary of Economic Projections, or ‘dot-plot’, suggested only two rate cuts in 2025, down from four cuts projected in September.

Additionally, Fed Chair Jerome Powell stated that the Fed will be cautious about further cuts as inflation remains stubbornly above the central bank’s 2% target. Traders are highly expected to focus on upcoming US economic data, including weekly Initial Jobless Claims, Existing Home Sales, and the final Q3 Gross Domestic Product (GDP) Annualized reading, scheduled for release on Thursday.

Switzerland's Trade Balance, released by the Federal Customs Administration, showed a narrowing surplus of 5,424 million in November, down from 8,025 million in October. On a month-on-month basis, exports declined to 23,682 million, while imports fell to 18,257 million.

The Swiss Franc (CHF) remains under pressure as the Swiss National Bank (SNB) reaffirmed its commitment to maintaining price stability over the medium term, signaling readiness to adjust monetary policy if needed. Switzerland's State Secretariat for Economic Affairs (SECO) has downwardly revised growth targets for the current year and 2025 to 0.9% and 1.5%, respectively.

Economic Indicator

Trade Balance

The Trade Balance released by the Federal Customs Administration is a measure of balance amount between import and export. A positive value shows a trade surplus while a negative value shows a trade deficit. Any variation in the figures influences the domestic economy. Generally speaking, if a steady demand in exchange for Swiss exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the CHF.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD trims losses and returns to the 1.1750 area

The US Dollar resumed its decline in the American afternoon, helping EUR/USD trim early losses. The pair trades around 1.1750 as market participants gear up for the European Central Bank monetary policy decision and the United States Consumer Price Index.