• 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

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.