• The US Dollar strengthens after solid US Retail Sales data, supporting gains in USD/CHF.
• Stephen Miran’s resignation clears the way for Kevin Warsh to lead the Federal Reserve, potentially.
• Persistent deflation in Switzerland continues to weigh on the CHF, reducing expectations of SNB rate hikes.

USD/CHF extends its advance for the fourth consecutive day on Friday and trades around 0.7850 at the time of writing, up 0.15% on the day. The pair benefits from the rebound in the US Dollar (USD), supported by resilient US economic data and renewed risk-off sentiment across markets.

US Retail Sales rose by 0.5% MoM in April, in line with expectations, following a 1.6% increase in March. On an annual basis, sales climbed 4.9%, above forecasts of 3.3%, highlighting the resilience of US consumer spending despite still elevated borrowing costs.

The US Dollar also benefits from developments surrounding the Federal Reserve (Fed). Stephen Miran’s resignation from the Board of Governors fuels speculation about Kevin Warsh potentially becoming the next Fed Chair. At the same time, persistent tensions in the Middle East continue to support expectations that US interest rates could remain higher for longer, further underpinning the Greenback.

The cautious market mood usually supports safe-haven currencies, but the Swiss Franc (CHF) remains pressured by domestic monetary policy expectations. Swiss producer and import prices fell 2% YoY in April, extending a long-running deflationary trend. This dynamic significantly reduces the likelihood of monetary tightening by the Swiss National Bank (SNB), which could keep its policy rate at 0% or intervene in foreign exchange markets to prevent excessive Swiss Franc appreciation.

However, Swiss consumer sentiment data came in less negative than expected, at -40 versus forecasts of -46, suggesting some resilience in the domestic economy. This could limit downside pressure on the Swiss Franc, although the current momentum remains supportive for the US Dollar.