USD/CHF consolidates around 0.7950 as investors await US inflation data

The USD/CHF pair trades in a tight range around 0.7950 during the late Asian trading session on Thursday. The Swiss Franc pair wobbles as investors await the United States (US) inflation data for November, which will be published at 13:30 GMT.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades flat around 98.45. The DXY holds onto its recovery move that triggered on Tuesday, following the release of the US Nonfarm Payrolls (NFP) combined report for October and November.

As measured by the Consumer Price Index (CPI), the headline inflation is expected to have grown at an annualized pace of 3.1%, faster than 3% in October. In the same period, the core CPI – which excludes volatile food and energy items – is estimated to have risen steadily by 3%.

Investors will pay close attention to the inflation data as it will influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook. Traders might pare Fed dovish expectations if inflation proves to be more persistent, as Fed officials have expressed concerns over inflation remaining well above the 2% target for a long period. Last week, Fed Chair Jerome Powell said in the press conference, following the interest rate decision, “Everyone at the table agrees inflation is too high.”

Going forward, the major driver for the US Dollar will be the announcement of Fed Chair Powell’s successor. Earlier in the day, US President Donald Trump stated that the next Fed chairman will be ‍someone who believes in lower ​interest rates “by ‌a lot”, a scenario that will be unfavourable for the US Dollar.

Meanwhile, the Swiss Franc (CHF) also trades flat amid a lack of clarity on the Swiss National Bank’s (SNB) interest rate outlook. The SNB is unlikely to shift into the negative interest rate policy as it will have an adverse impact on savers and pension funds.