USD/CHF consolidates around 0.9150 with Trump 2.O taking center stage

• USD/CHF oscillates around 0.9150 as investors turn cautious ahead of Trump's inauguration.
• Trump's economic policies are expected to boost US inflation and growth.
• The SNB is expected to continue reducing interest rates this year.

The USD/CHF pair trades sideways inside Friday's trading range around 0.9140 in Monday's European session. The Swiss Franc pair consolidates as investors have sidelined ahead of United States (US) President-elect Donald Trump's swearing ceremony.

Market participants expect an unprecedented global trading environment under Trump's administration as he is expected to sign over 200 orders soon after returning to the White House. His initial orders might include immigration controls, higher tariffs, and lower individual taxes. Higher import tariffs are expected to lead to a global trader war, a scenario that will boost demand for US-produced goods and services. While, at the same time, it will make offerings from other economies as expensive.

Trump's economic policies would be pro-growth and inflationary for the United States (US) economy and favorable for the US Dollar (USD). At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, is down to near 109.00 but is still 10% higher in slightly over three months.

Going forward, Trump's policies are expected to force the Federal Reserve (Fed) to maintain interest rates elevated for a longer period. According to the CME FedWatch tool, traders are pricing in more than one 25-bps interest rate reduction this year, seeing the first coming in the June meeting.

Meanwhile, the Swiss Franc (CHF) remains broadly weak as investors expect the Swiss National Bank (SNB) could continue reducing interest rates. Swiss interest rates have already come down to 0.5% amid growing risks of inflation undershooting the central bank's target.