03 Feb 2025

• USD/CHF extends its upside to around 0.9165 in Monday’s early European session.
• USD strengthens on Trump's tariffs.
• Swiss Real Retail Sales rose by 2.6% YoY in December vs. 0.6% expected.
• USD/CHF continues to rise, reaching approximately 0.9165 during the early European session on Monday. The U.S. dollar gains strength in response to tariffs imposed by Trump. In December, Swiss real retail sales increased by 2.6% year-on-year, surpassing the anticipated growth of 0.6%.
• The Greenback has appreciated by as much as 0.60% against the Swiss franc (CHF), achieving a level not observed since May 2024. This increase follows President Trump's announcement on Saturday of a 25% tariff on imports from Mexico and Canada, along with a new 10% tax on Chinese goods.
  
  On Monday, the Wall Street Journal reported, citing anonymous sources, that the Chinese government is preparing an initial proposal aimed at preventing further tariff escalations and technology restrictions from the Trump administration, signaling China's willingness to engage in trade negotiations. Investors are expected to closely observe developments related to trade tariff policies, as any indication of a renewed trade conflict between the United States and its trading partners could strengthen the US Dollar against its competitors.
  
  Data released by the US Bureau of Economic Analysis (BEA) on Friday indicated that the Personal Consumption Expenditures (PCE) Price Index increased by 2.6% year-over-year in December, compared to 2.4% in November, aligning with market expectations. Additionally, the core PCE Price Index, which excludes the more volatile food and energy sectors, rose by 2.8% year-over-year in December, consistent with November's figure and market forecasts.
  
  This inflation report from the United States suggests that the Federal Reserve is unlikely to expedite interest rate cuts, thereby bolstering the USD. Following the tariff announcements, investors adjusted their expectations regarding rate cuts from the Fed, now pricing in a 54% probability of two reductions this year and a 44% chance of just one.
  
  In Switzerland, the Real Retail Sales increased by 2.6% year-over-year in December, compared to a revised figure of 1.4% (up from 0.8%) previously reported, according to the Federal Statistical Office on Friday. This result exceeded the anticipated growth of 0.6%.