USD/CHF remains bid near 0.8000 despite Swiss CPI’s uptick

USD/CHF appreciates for the third consecutive day,, nearing the 0.8000 level.
Swiss CPI stagnated in December, against market expectations of further contraction.
FX volatility remains subdued, with markets awaiting the key US Nonfarm Payrolls report

Guillermo Alcala FXStreet

The US Dollar maintains its upside trend against the Swiss Franc unchanged, despite the stronger-than-expected Swiss Consumer Prices Index (CPI) figures released on Thursday. The pair has rallied more than 1.5% from lows near 0.7860 in late December and is reaching levels close to 0.8000, where bulls might find some resistance.

A report from the Swiss Federal Statistics office released on Thursday revealed that consumer inflation remained flat in December, against expectations of a 0.1% drop and following a 0.2% contraction in November. Year-on-year, the CPI ticked up 0.1% from novembers 0% reading, as expected.

SNB monetary policy is likely to remain steady

These figures hardly change the outlook for the Swiss National Bank’s monetary policy. The Bank has reiterated its reluctance to cut interest rates into negative levels, and monetary tightening is off the table for the foreseeable future. The impact of the reading on the Swiss Franc, thus, has been marginal.

In the US, data released on Wednesday was mixed. Employment figures confirmed that the labour market remains stalled, but the ISM Services Purchasing Managers' Index (PMI) figures revealed that the sector’s activity accelerated beyond expectations, improving the outlook for US economic growth.

FX volatility, however, remains subdued on Thursday, with investors wary of placing large US Dollar bets awaiting the release of Friday’s Nonfarm payrolls report, which is expected to shed some light on the scope of the US Federal Reserve’s (Fed) monetary easing cycle.

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.

EUR/USD eases marginally, back to 1.1800

EUR/USD navigates a narrow range on Thursday, hovering around the 1.1800 neighbourhood in a context of humble gains in the US Dollar. The pair’s lacklustre performance come amid the unabated trade uncertainty, geopolitical tensions in the Middle East and the cautious tone from the ECB’s Lagarde.

GBP/USD retreats from tops, approaching 1.3540

GBP/USD partially sets aside Wednesday’s strong advance and recedes to the 1.3540 region on Thursday. Cable’s modest retracement follows the equally acceptable gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold clings to gains just below $5,200, focus on geopolitics

Gold is edging modestly higher on Thursday, adding to Wednesday’s uptick and holding just below the $5,200 mark per troy ounce against the backdrop of modest gains in the US Dollar. In the meantime, attention is turning to the geopolitical scenario following US-Iran nuclear talks.