USD/CHF holds gains near 0.7950 as expectations for a December Fed rate cut fade

• USD/CHF appreciates as the US Dollar gains on decreasing odds of Fed rate cuts.
• CME FedWatch Tool indicates pricing in a 46% chance of a 25-basis-point Fed rate cut in December.
• The Swiss Franc could gain support from rising expectations of the SNB keeping policy rate unchanged at 0% in December.

USD/CHF continues to gain ground for the second successive session, trading around 0.7950 during the Asian hours on Monday. The pair appreciates as the US Dollar (USD) gains amid diminishing likelihood of a Federal Reserve (Fed) interest rate cut in December. Traders are preparing for a wave of delayed United States (US) economic data after the government's reopening, looking for clearer signals on Federal Reserve (Fed) policy.

The highly anticipated September Nonfarm Payrolls report is scheduled for release on November 20, with markets also awaiting a revised timeline for other key indicators. However, US National Economic Council Director Kevin Hassett cautioned last week that some October data may "never materialize," as several agencies were unable to gather information during the shutdown.

The CME FedWatch Tool suggests that financial markets are now pricing in a 46% chance that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, down from 67% probability that markets priced a week ago.

Kansas City Fed President Jeffery Schmid said on Friday that monetary policy should "lean against demand growth," adding that current Fed policy is "modestly restrictive," which he believes is appropriate. Moreover, St. Louis Fed President Alberto Musalem said Thursday that rates are now closer to neutral than restrictive and the US economy remains resilient. Musalem stressed the need for caution, noting there is limited room to ease without risking overly accommodative policy.

The upside in the USD/CHF pair may be restrained as the Swiss Franc (CHF) could draw further support from growing expectations that the Swiss National Bank (SNB) will hold its policy rate at 0% in December amid forecasts of rising inflation. SNB officials have signaled confidence in an upward inflation trajectory, with Vice President Antoine Martin stating it is "expected to increase slightly."

The CHF also strengthened after the Swiss government confirmed it had reached a 15% tariff agreement with the Trump administration--a development that offers relief to Switzerland, which had previously faced the highest tariff imposed on any developed nation.