USD/CHF rises above 0.7930 in a cautious start of the week

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The USD/CHF pair trades 0.15% higher to near 0.7930 during the Asian trading session on Monday.

USD/CHF moves higher to near 0.7930 as the US Dollar gains in a risk-off market sentiment.
Investors shift to the safe-haven fleet after the US struck Venezuela and captured President Nicolas Maduro.
The major highlight of Monday will be the Swiss Real Retail Sales and the US ISM Manufacturing PMI data.

The USD/CHF pair trades 0.15% higher to near 0.7930 during the Asian trading session on Monday. The Swiss Franc pair gains as the US Dollar (USD) trades higher amid risk-off market sentiment, following the United States’ (US) strike on Venezuela and the capture of President Nicolas Maduro to face drug-trafficking charges in New York.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises 0.25% to near 98.66.

Investors brace for sheer volatility in the US Dollar this week, with a slew of US data due to be released, notably the Nonfarm Payrolls (NFP) data for December, which would not have been distorted by the government shutdown.

The US NFP data will significantly influence market expectations for the Federal Reserve’s (Fed) monetary policy action in the January meeting, given that rate cuts in 2025 were majorly driven by weakness in the job market.

In Monday’s session, investors will focus on the US ISM Manufacturing Purchasing Managers’ Index (PMI) data for December, which will be published at 15:00 GMT. The ISM Manufacturing PMI is expected to come in mildly higher at 48.3 from 48.2 in November, suggesting that activities have contracted again, but at a slightly moderate pace. A figure below the 50.0 threshold is seen as a decline in business activities.

Meanwhile, the major highlight for the Swiss Franc (CHF), this week, will be the Consumer Price Index (CPI) data for December, which will be released on Thursday. The inflation data will provide cues about whether the Swiss National Bank (SNB) will pivot to policy normalization in the near term.

On Monday, investors will focus on the Real Retail Sales data for November, which will be released at 07:30 GMT. Swiss Real Retail Sales are estimated to have grown at an annualized pace of 2.9%, faster than 2.7% in October.

Economic Indicator

ISM Manufacturing PMI

The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US manufacturing sector. The indicator is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the US Dollar (USD). A reading below 50 signals that factory activity is generally declining, which is seen as bearish for USD.

Why it matters to traders?

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) provides a reliable outlook on the state of the US manufacturing sector. A reading above 50 suggests that the business activity expanded during the survey period and vice versa. PMIs are considered to be leading indicators and could signal a shift in the economic cycle. Stronger-than-expected prints usually have a positive impact on the USD. In addition to the headline PMI, the Employment Index and the Prices Paid Index numbers are watched closely as they shine a light on the labour market and inflation.