USD/CHF remains below 0.9100 following Swiss Real Retail Sales

USD/CHF appreciated as the US Dollar strengthened on the Fed’s hawkish shift regarding its policy outlook.
Swiss Real Retail Sales increased by 0.8% YoY in November, against the expected 1.2% and prior 1.5%. rise.
The recent dot plot in the Fed’s Summary of Economic Projections indicated expectations for just two rate cuts in 2025.

Akhtar Faruqui FXStreet

USD/CHF steadies after registering losses in the previous session, trading around 0.9100 during the Asian hours on Monday. The pair moves little following the release of Real Retail Sales in Switzerland, which came in at a 0.8% increase year-over-year in November, falling short of the expected 1.2% rise and previous reading of 1.5%. Traders will likely observe the country's Consumer Price Index (CPI) and Foreign Currency Reserves for December on Tuesday.

On Friday, the SVME Manufacturing Purchasing Managers Index (PMI) dipped slightly to 48.4 in December, down from 48.5 in November but marginally exceeding market expectations of 48.3.

The Swiss Franc (CHF), a traditional safe-haven currency, received support from escalating geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict. Last week, Russia launched a drone strike on Ukraine's capital, Kyiv, early Wednesday on New Year's Day, causing two fatalities, injuring at least six people, and damaging buildings in two districts.

The USD/CHF pair gains support as the US Dollar Index (DXY), which measures the US Dollar’s (USD) performance against six major currencies, holds its position near 109.00, close to recent highs. On Friday, the US manufacturing sector continued to contract in December, though at a slower pace, as the ISM Manufacturing PMI improved to 49.3 from 48.4 in November. This figure exceeded the market expectation of 48.4.

The US Dollar may further strengthen as the Federal Reserve (Fed) is expected to halt its easing cycle at the January meeting following three consecutive rate cuts. According to the latest dot plot in the Fed’s Summary of Economic Projections, policymakers anticipate the Federal Funds Rate reaching 3.9% by the end of the year, indicating expectations for just two rate cuts in 2025.

Fed officials have also signaled a more cautious approach to rate reductions in 2025. On Friday, Richmond Fed President Thomas Barkin highlighted that the benchmark policy rate should remain restrictive until there is greater confidence that inflation will return to the 2% target. Additionally, Fed Governor Adriana Kugler underscored the challenging balancing act facing US central bankers as they aim to slow the pace of monetary easing this year.

Economic Indicator

Real Retail Sales (YoY)

The Retail Sales data, released by the Swiss Federal Statistical Office on a monthly basis, measures the volume of goods sold by retailers in Switzerland. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the YoY reading comparing sales volumes in the reference month with 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 shows resilience below 38.2% Fibo. near mid-0.7100s

The AUD/USD pair touches a one-and-a-half-week low, around the 0.7140 region during the Asian session on Monday, though it lacks follow-through. Spot prices currently trade just above mid-0.7100s, down nearly 0.25% for the day.

USD/JPY: Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom

The USD/JPY pair attracts some buyers at the start of a new week and climbs closer to the 154.00 mark during the Asian session, reversing a part of Friday's losses. Spot prices, however, remain confined in a range held over the past week or so and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await this week's key central bank events.

Gold: Fed’s rate decision to drive the next move

Gold reflects a subdued performance at the start of the Federal Reserve’s (Fed) monetary policy week at around $4,330. Fed’s interest rate expectations heavily influenced last week after the release of the hot United States (US) Producer Price Index (PPI) and Consumer Price Index (CPI) reports for August.

Pi Network extends gains as ecosystem development supports recovery

Pi Network (PI) extends its recovery on Monday, trading above $0.097 after two consecutive weeks of gains. Continued ecosystem development and improved developer tools are boosting utility. Meanwhile, the technical indicators point to a tentative recovery, but overhead Exponential Moving Averages remain a challenge and cap PI gains.

Canada CPI expected to show steady inflation in August

Canada’s August Consumer Price Index figures will be the focus of attention when published on Monday. Indeed, Statistics Canada data will provide markets with an update on price pressures following the Bank of Canada’s September 2 meeting, when officials kept the interest rate steady at 2.25%, broadly in line with analyst consensus.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.