USD/CHF remains below 0.9100 on the subdued US Dollar, awaits Fedspeak
|- USD/CHF trims daily losses on expectations of de-escalating the Israel-Iran situation.
- An Iranian official stated there is currently no immediate plan for retaliation against the Israeli airstrikes.
- The US Dollar may gain ground on higher US Treasury yields as Fed officials conveyed hawkish messages on Thursday.
USD/CHF trades around 0.9080 during the European hours on Friday. The pair trims intraday losses after the statement made by an Iranian official that there is no immediate plan of retaliation against Israeli airstrikes.
The safe-haven Swiss Franc (CHF) strengthened as risk aversion spread across financial markets, triggered by reports from ABC News confirming Israeli missile strikes on a site in Iran on Friday, which heightened tensions in the Middle East. Additionally, Reuters cited Iran’s Fars News Agency reporting that locals heard explosions at the central Isfahan airport.
In the near term, the Swiss Franc is anticipated to encounter downward pressure as the Swiss National Bank (SNB) is projected to further decrease interest rates. With price pressures in the Swiss economy persisting below the targeted rate of 2%, SNB might implement another rate cut during its upcoming June meeting.
The US Dollar Index (DXY), which gauges the US Dollar (USD) against six major currencies, edges lower to near 106.10. Nevertheless, hawkish comments from Federal Reserve (Fed) officials on Thursday prompted a rise in US Treasury yields. At present, 2-year and 10-year yields on US Treasury bonds are at 4.96% and 4.58%, respectively. The higher yields may attract support for the Greenback, thus underpinning the USD/CHF.
Atlanta Fed President Raphael Bostic emphasized that US inflation is unreasonably high and stressed the need for the Fed to continue making strides in addressing inflation. Additionally, New York Fed President John Williams underscored the Fed's dedication to being guided by data and indicated that he does not currently see an urgent necessity to decrease interest rates.
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