Fed rate-cut expectations sit at 85%, putting pressure on the US Dollar, even with solid economic data. Weekly jobless claims came in at 216,000, lower than the forecast of 225,000, showing some strength in the labor market, even as a cooling trend continues. USD/CHF is trading around 0.8050 and faces selling pressure from a weaker US Dollar overall. Speculators expect a 25-basis-point cut in the December meeting, even though Durable Goods Orders were better than predicted. Market dynamics are also affected by speculation about changes in Fed leadership.

Market Liquidity Impact

Market liquidity is low due to the US Thanksgiving holiday, reducing volatility across assets and strengthening expectation-driven moves. The US Dollar Index hovers near 99.57, failing to gain from good data. Meanwhile, the Swiss National Bank is likely to keep its policy rate at 0.00%, potentially until 2027. Traders in Switzerland are looking ahead to Q3 GDP and the KOF Leading Indicator data, which could impact the local economic outlook. Until new data arrives, USD/CHF faces a tough environment amid Fed rate-cut hopes. The US Dollar is performing better mainly against the Swiss Franc, as shown in the heat map with percentage changes among major currencies. The US Dollar is under significant strain with a near-certain Fed rate cut anticipated for December. The market seems to be overlooking strong data, like jobless claims, focusing instead on the broader cooling economy, highlighted by the latest core PCE number of 2.8%, the lowest since early 2023. This prevailing sentiment is greatly influencing currency movements. This situation sharply contrasts with the Swiss National Bank’s stance, which is expected to keep its policy rate steady for the foreseeable future, possibly until 2027. Recently, SNB Chairman Thomas Jordan reaffirmed the bank’s commitment to stability, with Swiss inflation steady at a comfortable 1.4%. This growing divide in policy between a dovish Fed and a neutral SNB places strong downward pressure on the USD/CHF pair.

Opportunities for Derivative Traders

For derivative traders, this creates a clear opportunity to bet on a continued decline in USD/CHF. Buying put options that expire in January 2026 with strike prices around 0.8000 or 0.7950 could be a smart move to take advantage of this trend. The current low volatility, due to the US holiday, may offer a chance to enter these positions at a reasonable price. However, we must recognize the risks involved. A surprisingly weak Swiss GDP report tomorrow could lead to a short-term reversal. A more cautious strategy would be to use a bear put spread, which involves buying a higher-strike put and selling a lower-strike one, helping to lower the upfront cost. This approach would still profit from a downward move, but it would limit both potential gains and initial cash outlay. Create your live VT Markets account and start trading now.

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