Monday, November 10th. The current foreign exchange market is still primarily driven by interest rate expectations and the gap in macroeconomic data, with moderate risk appetite and subdued volatility. The US dollar index consolidated around 99.60, while the USD/CHF pair maintained a narrow range of fluctuation around 0.8050 during the European session. Liquidity and news-driven factors combined to dominate short-term price movements, with spread trading and hedging dominating.



At the US congressional level, the Senate has advanced a plan to extend temporary federal funding until January, but this still requires a vote in the House of Representatives and the president's signature. This arrangement is not final; it primarily buys time for fiscal negotiations, but its direct effect is to reduce the near-term policy uncertainty premium. In the short term, the easing of the "shutdown" risk will help restore the pace of statistical data releases, including key data such as non-farm payrolls and the consumer price index, thus providing an anchor for the market to recalibrate the Fed's path. However, the time lag in the executive and legislative processes means that even if the funding is approved, data collection and release may be delayed in stages, and the market may still be in an environment of "incomplete information" for the next few weeks.

Regarding interest rate expectations, derivatives pricing indicates that the market anticipates a 62.6% probability of a rate cut by the Federal Reserve at its December meeting. This pricing reflects two implications: first, the marginal slowdown in previous growth momentum and the downward trend in inflation are still considered the main themes; second, the period for policy rates to remain within a restrictive range will be extended, but the threshold for marginal adjustments has been lowered. If data resumes release and confirms that inflation is easing and employment is cooling marginally, then medium- and long-term US Treasury yields may remain weak, suppressing the dollar's interest rate advantage. For the USD/CHF exchange rate, the narrowing interest rate differential and the reallocation of defensive funds often correspond to a situation where the exchange rate repeatedly declines or fluctuates at low levels.

The divergence between inflation and demand expectations is also gaining momentum. The latest consumer survey shows that confidence has fallen to its lowest level since mid-2022, while one-year inflation expectations have risen to 4.7%. Under the assumption that statistical methods and sample structure remain unchanged, this combination of "weak confidence and resilient inflation expectations" reinforces concerns about pressure on real income and the rebalancing of service consumption. Meanwhile, while the policy proposal to transfer tariff revenue to residents in the form of cash or tax credits has not yet been implemented, the issue itself will disrupt medium-term inflation expectations. If such discussions intensify in the coming weeks, the inflation risk premium may rise again, causing short-term fluctuations in the relative strength of nominal and real interest rates, thereby influencing the direction of the US dollar.

Switzerland's policy signals are relatively clear. Key officials at the Swiss National Bank (SNB) have previously stated that inflation may rise moderately in the coming quarters, but interest rates are likely to remain unchanged for an extended period. Compared to other major central banks, the SNB's communication emphasizes a balance between price stability and a sound financial system, distancing itself from market speculation about a "return to negative interest rates" in this cycle. This statement reduces bets on rapid easing, maintaining the Swiss franc's attractiveness as a low-volatility safe-haven asset.

Let's examine the potential impact paths. First, if the temporary funding package is successfully enacted and statistical releases resume quickly, and non-farm payrolls and CPI figures confirm moderate month-on-month inflation and sluggish wage growth, the Fed's forward guidance may emphasize "data-driven patience," limiting event-driven buying of the dollar and increasing the probability of the dollar/Swiss franc pair remaining in a low-level consolidation. Second, if subsequent political negotiations lead to further delays in data releases, the market may continue to rely on survey-based and high-frequency indicators. Third, if discussions about potential fiscal stimulus or tax adjustments intensify and revise the inflation expectation curve upwards, rising nominal interest rates may support the dollar in the short term, but the sustainability of this support will depend on whether real interest rates rise in tandem.

Technical aspects

The USD/CHF four-hour chart shows that the rebound from 0.7924 was capped at 0.8123, and after a pullback, it found support at 0.8031, currently consolidating sideways around 0.8050. 0.8000 and the previous support level of 0.7986 form strong support; 0.8065-0.8080 are short-term resistance levels, with further resistance seen at 0.8123.



After the MACD fell from its high, the green bars shortened, the negative momentum converged, and there were signs of divergence between price and momentum; the RSI (14) was about 47, which was oscillating upward in the weak range. Short-term volatility decreased and the K-line body narrowed, indicating that trading was mainly based on hedging and position adjustment. Pay attention to the breakout direction and volume of 0.8031/0.8000 and 0.8065/0.8080.

Looking ahead

The key variables for USD/CHF are, in order: the pace and direction of data recovery, changes in the slope of the interest rate curve, and the marginal tone of policy communication. Given that the market has already priced in a certain probability of a Fed easing in December, any deviations from expectations in inflation and employment figures could amplify price reactions. If inflation cools further in the services sector while the goods sector remains weak due to declining freight and airfare prices, the market will reassess the urgency of policy, increasing the likelihood of temporary pressure on the dollar. Conversely, if inflation expectations rebound due to fiscal discussions or supply disruptions, the direction of real interest rates will become a key watershed, determining the height and duration of the dollar's rebound.

In summary, the current price and volatility structure of the USD/CHF exchange rate reflects a two-tiered game: externally, the re-anchoring of US data and policy path; and internally, the continuation of the Swiss National Bank's efforts to stabilize expectations and the Swiss franc's safe-haven status. As long as data recovery and policy communication do not experience a directional shift, the low volatility and defensive characteristics are likely to continue. In the coming weeks, attention will be focused on the legislative implementation of the temporary funding package, the timing and direction of the non-farm payroll and CPI releases, and the statements made by officials from both central banks regarding inflation rebalancing.