USD/CHF trades around 0.8900 after pulling back from four-month highs

• USD/CHF retreats from a four-month high of 0.8917 recorded on Thursday.
• Fed's Powell stated that US economic performance has been "remarkably good," allowing to lower rates gradually.
• The Swiss Franc could face challenges due to the increased odds of an SNB's rate cut in December.

USD/CHF pauses its five-day winning streak, trading around 0.8900 during Friday's Asian session after retreating from a four-month high of 0.8917 reached on Thursday. This pullback is likely due to a downward correction in the US Dollar (USD) following remarks from Federal Reserve (Fed) Chair Jerome Powell.

Fed's Powell stated that the recent performance of the US economy has been "remarkably good," allowing the Federal Reserve the flexibility to gradually lower interest rates. Meanwhile, Richmond Fed President Thomas Barkin stated that while the Fed has made strong progress so far, there's still more work to be done to keep the momentum going.

The US Producer Price Index (PPI) rose by 2.4% year-over-year in October, up from a revised 1.9% increase in September (previously 1.8%) and surpassing market expectations of 2.3%. Meanwhile, the Core PPI, which excludes food and energy, increased by 3.1% YoY, slightly above the forecasted 3.0%.

The downside for the USD/CHF pair may be limited, as the Swiss Franc (CHF) could weaken further with the increased likelihood of an interest rate cut by the Swiss National Bank (SNB) in December. This expectation follows Switzerland's inflation rate falling to 0.6% in October, the lowest in over three years, signaling inflation is under control.

SNB Vice Chairman Antoine Martin stated in an interview published on Monday that the SNB is not committed to additional interest rate cuts in December. This comes despite earlier comments suggesting potential reductions to address inflation.

At its September meeting, the Swiss National Bank (SNB) indicated readiness for further rate cuts, with both Chairman Martin Schlegel and Vice Chairman Antoine Martin suggesting the possibility of additional reductions, including a potential return to negative rates, according to Reuters.