A combination of factors assisted USD/CHF to regain positive traction on Friday. A positive risk tone undermined the safe-haven CHF and extended some support. Sustained USD buying remained supportive ahead of the US monthly jobs report. The USD/CHF pair traded with a positive bias, around the 0.9215-20 region through the early European session, though the uptick lacked bullish conviction. The global risk sentiment stabilized a bit amid easing fears about the potential economic fallout from the new and possible vaccine-resistant Omicron variant of the coronavirus. Adding to this, the passage of a bill to fund the US government through mid-February further boosted investors' confidence. This was evident from a positive tone around the equity markets, which undermined the safe-haven Swiss franc and assisted the USD/CHF pair to attract some buying on the last day of the week.
On the other hand, the US dollar remained well supported by firming expectations that the Fed will tighten its monetary policy sooner rather than later to contain stubbornly high inflation. Investors started pricing in the possibility of liftoff in June 2022 in reaction to Fed Chair Jerome Powell's hawkish comments. In his congressional testimony earlier this week, Powell said the Fed needs to be ready to respond to the possibility that inflation may not recede in the second half of 2022.
Powell also added that the US central bank would consider a faster tapering of its bond purchases at the upcoming two-day meeting starting on December 14. Several FOMC members backed the case for speeding up the pace of withdrawing the pandemic-era stimulus. This was seen as a key factor that continued acting as a tailwind for the greenback. Bulls, however, seemed reluctant, rather preferred to wait on the sidelines ahead of Friday's release of the closely-watched US monthly jobs data.
The popularly known NFP report will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the USD/CHF pair. This makes it prudent to wait for a strong follow-through buying before confirming that the recent corrective pullback from a multi-month peak touched in November has run its course. Heading into the key data risk, any subsequent move up is more likely to confront stiff resistance near the weekly swing high, around the 0.9270-75 region.
