USD/CHF clings to gains near 0.7970 ahead of Swiss CPI, US NFP data

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The USD/CHF pair holds onto two-day gains near 0.7975 during the late Asian trading session on Thursday. The Swiss Franc pair trades firmly as the US Dollar (USD) gains, following strong United States (US) ISM Services Purchasing Managers’ Index (PMI) data for December.

USD/CHF trades firmly near 0.7970 ahead of the Swiss inflation and the US NFP data for December.
Upbeat US ISM Services PMI data for December has strengthened the US Dollar.
Swiss inflation is expected to have risen at an annualized pace of 0.1% in December.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to gains near 98.70.

On Wednesday, the ISM report showed that the Services PMI, which gauges activities in the services sector that accounts for two-thirds of the US economy, rose to 54.4 from 52.6 in November. Economists expected the data to come in lower at 52.3. Strong Services PMI data resembles US economic resilience, given that the economy is technology-intensive.

Analysts at ING have said in a note that the strong US Services PMI could cloud the ongoing Federal Reserve (Fed) monetary-easing campaign. Currently, the Fed is expected to deliver at least two interest rate cuts of 25 basis points (bps) this year, according to the CME FedWatch tool.

Going forward, the next major trigger for the US Dollar will be the Nonfarm Payrolls (NFP) data for December, which will be published on Friday. The US NFP data will showcase the current state of the labor market and is expected to influence market expectations for the Fed’s monetary policy outlook.

Meanwhile, the Swiss Franc (CHF) trades broadly calm ahead of the release of Consumer Price Index (CPI) data for December at 07:30 GMT. Swiss inflation is expected to have accelerated to 0.1% Year-on-Year (YoY) to 0.1% from 0% in November. On a monthly basis, price pressures are expected to have deflated again, but at a moderate pace of 0.1% against the prior reading of 0.2%.

The Swiss National Bank (SNB) is expected to maintain its dovish monetary stance for a longer period if the inflation data comes in as expected.

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.