The USD/CHF pair trades in a narrow range around 0.8060 during the European session on Monday, as the US Dollar (USD) remains steady following progress in the US Senate toward approving a short-term government funding measure.
At the time of writing, the US Dollar Index (DXY) — which measures the Greenback against six major currencies — holds near 99.60, reflecting a calm tone in the broader market.
US Senate Moves Toward Temporary Funding Deal
Eight Democratic senators joined Republicans in supporting a stopgap bill that extends funding for certain government departments through January, in exchange for prolonging subsidies under the Affordable Care Act.
The potential reopening of the US federal government would allow the release of key economic data, such as Nonfarm Payrolls (NFP) and the Consumer Price Index (CPI), which investors are closely monitoring to gauge the Federal Reserve’s (Fed) next policy move.
According to the CME FedWatch Tool, markets now assign a 62.6% probability that the Fed will cut interest rates at its December meeting, as policymakers continue to assess the impact of slower economic activity.
Swiss Franc Supported by SNB Outlook
Meanwhile, the Swiss Franc (CHF) trades slightly higher against most major peers, supported by expectations that the Swiss National Bank (SNB) will keep policy steady and avoid a return to negative interest rates.
SNB Chairman Martin Schlegel stated last week that inflation is expected to rise modestly in the coming quarters, suggesting the central bank will maintain current policy settings for an extended period.
“Inflation should rise slightly in the next quarters, and interest rates are expected to remain on hold for a long time,” Schlegel noted.
This outlook underpins the CHF’s resilience, keeping the USD/CHF pair confined within a tight trading band near 0.8060.
US Dollar FAQs
What is the US Dollar (USD)?
The US Dollar is the world’s most traded currency, accounting for more than 88% of global FX turnover (about $6.6 trillion daily, according to 2022 BIS data). It serves as the global reserve currency and is widely used in international trade and finance.
How does the Federal Reserve impact the USD?
The Fed shapes USD valuation primarily through monetary policy — adjusting interest rates to balance inflation and employment. Rate hikes typically support the USD, while cuts weigh on it.
What are QE and QT?
- Quantitative Easing (QE): The Fed buys government bonds to inject liquidity into the financial system, generally weakening the USD.
- Quantitative Tightening (QT): The Fed reduces bond holdings, tightening liquidity, which is typically USD-positive.
In summary:
The USD/CHF pair remains stable around 0.8060 as traders weigh optimism over a potential US government reopening against expectations of a December Fed rate cut. Meanwhile, the SNB’s steady policy stance continues to lend support to the Swiss Franc.