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• USD/CHF retreats from its seven-month high at 0.9080, marked on Tuesday.
• US weekly Initial Jobless Claims and S&P Global Manufacturing PMI for December will be eyed on Thursday.
• The safe-haven Swiss Franc receives support from escalating geopolitical tensions.

The USD/CHF pair continues to decline from its seven-month high of 0.9080, as the US Dollar Index (DXY) hovers near 108.30 after retreating from a multi-year high of 108.58 reached on Tuesday. During European trading hours on Thursday, the USD/CHF pair trades around 0.9050.

Traders will likely observe the US weekly Initial Jobless Claims and S&P Global Manufacturing PMI for December, scheduled to be released later in the North American session.

However, the downside of the US Dollar could be limited by growing expectations that the US Federal Reserve (Fed) will adopt a slow and cautious approach to further rate cuts in 2025. During its final monetary policy meeting of 2024 on December 18, the Fed signaled plans to reduce interest rates only twice in 2025, a significant decrease from the four rate cuts projected in September’s updated economic outlook.

The Swiss Franc (CHF), a traditional safe-haven currency, gains support amid escalating geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict.

According to Reuters, Russia launched a drone strike on Ukraine's capital, Kyiv, early Wednesday on New Year's Day, causing two fatalities, injuring at least six people, and damaging buildings in two districts. Explosions echoed across the morning as Ukraine's air force warned of incoming drones.

Meanwhile, in northern Gaza, the Israeli military intensified operations, targeting a suburb of Gaza City on Wednesday. Airstrikes in Shejaia killed at least eight Palestinians, according to local medics. The Israeli military has not issued a statement, and the identities of those killed remain unconfirmed.

Earlier this week, the KOF Leading Economic Indicator dropped by 3.4 points in December, falling to 99.5 from a revised 102.9 in November and missing market expectations of 101.1. This decline signals a potential slowdown in Switzerland’s economic outlook.

Looking ahead, the focus will shift to the SVME Purchasing Managers' Index (PMI) for December, which is scheduled for release on Friday.

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