The USD/CHF pair is trading sideways near 0.8060 during Monday’s European session, with the US Dollar (USD) consolidating as investors digest progress on the US federal funding bill and assess the broader monetary policy outlook from both the Federal Reserve (Fed) and the Swiss National Bank (SNB).
US Dollar Holds Steady as Senate Advances Funding Bill
The US Dollar Index (DXY), which tracks the Greenback against six major currencies, remains stable around 99.60 after the US Senate moved forward with a short-term funding measure to keep the government open until January.
During the vote, eight Democratic lawmakers joined Republicans in supporting the proposal, which includes an extension of Affordable Care Act subsidies scheduled for a separate vote in December. The progress eased near-term fiscal concerns, providing modest stability to the USD.
A full reopening of government operations would enable the release of key economic indicators — including Nonfarm Payrolls (NFP) and the Consumer Price Index (CPI) — which investors are eager to analyze to gauge the Fed’s next policy steps.
Markets Price in December Fed Rate Cut
According to the CME FedWatch Tool, markets currently assign a 62.6% probability that the Federal Reserve will cut interest rates at its December meeting. The growing expectation of policy easing has limited the USD’s upside, even as fiscal stability improves.
Swiss Franc Gains as SNB Maintains Policy Caution
Meanwhile, the Swiss Franc (CHF) trades slightly higher against most major peers — except the commodity-linked currencies — as expectations fade that the Swiss National Bank (SNB) will return to negative interest rates.
SNB Chairman Martin Schlegel recently stated that inflation is expected to rise modestly in the coming quarters, suggesting that current interest rate levels will remain in place 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 cautious tone has supported the CHF, reinforcing its status as a safe-haven asset amid a broadly mixed risk environment.
US Dollar Overview
The US Dollar (USD) is the world’s most traded and widely held currency, serving as the global reserve asset for over half a century. Its value is primarily driven by Federal Reserve monetary policy, US economic performance, and global demand for safe-haven assets.
- Federal Reserve Policy: The Fed’s dual mandate focuses on maintaining price stability and maximum employment. Rate hikes typically strengthen the USD, while rate cuts weaken it.
- Quantitative Easing (QE): When the Fed expands liquidity by purchasing bonds, it increases money supply and tends to depress the Dollar.
- Quantitative Tightening (QT): The opposite of QE — reducing liquidity by allowing bonds to mature without reinvestment — generally supports a stronger USD.
In summary:
The USD/CHF pair is holding steady around 0.8060 as traders weigh the implications of the US government funding bill and a likely December Fed rate cut. Meanwhile, the Swiss Franc remains firm on expectations that the SNB will keep rates steady amid slightly higher inflation prospects. Unless the Fed adopts a more hawkish tone or US data surprises to the upside, the pair may continue to trade within a narrow range in the near term.
