USD/CHF trades higher around 0.8630 as Fed is expected to maintain current interest rate

• USD/CHF gains ground on positive sentiment ahead of Fed decision.
• Fed is expected to not adjust the current rate policy in its January meeting.
• Swiss Trade Balance reduced to 1,248 million in December from 3,833 million prior.

USD/CHF experiences upward movement for the second consecutive session on Wednesday, edging higher to near 0.8630 during the Asian session. This positive momentum is attributed to anticipation and support ahead of the Federal Reserve’s (Fed) interest rate decision later in the day. Market participants seem to have priced in the expectation that the Fed will likely make no adjustments in January’s meeting.

However, the CME’s FedWatch Tool is indicating a 43% probability of the Federal Reserve implementing the first rate cut in March. Furthermore, there is a 53% chance of a 25 basis points rate cut in May. These probabilities suggest that investors are positioning for potential changes in the Fed’s monetary policy in the coming months, which could impact the USD/CHF pair.

On Tuesday, the US JOLTS Job Openings for December showed improvement, reaching 9.026 million compared to the previous figure of 8.925 million and surpassing the anticipated 8.7500 million. The US Housing Price Index (MoM) remained unchanged at 0.3% in November.

Investors are expected to closely watch the US ADP Employment Change data scheduled for release on Wednesday. This data is often considered a precursor to the more comprehensive US Nonfarm Payrolls report, set to be released later in the week.

The Federal Customs Administration of Switzerland released the monthly report for December’s Imports, indicating a decrease to 17,551 million from the previous 20,454 million. Exports (MoM) also decreased to 18,798 million from the prior figure of 24,287 million, leading to a reduced Trade Balance of 1,248 million from 3,833 million.

Last week, SNB President Thomas Jordan expressed uncertainty about the Swiss National Bank’s (SNB) stance on the persistent strength of the currency. Traders will be observing Wednesday’s Real Retail Sales and the ZEW Survey to assess the overall health of the Swiss economy.