|

Swiss Franc weakens as SNB resists currency strength, US CPI awaited

  • USD/CHF gains ground as deteriorating market sentiment boosts demand for US Dollar.
  • The SNB continues to lean against Swiss Franc strength despite a slight rebound in inflation.
  • Markets now await US inflation data to refine expectations for the Fed’s monetary policy path.

USD/CHF trades around 0.7815 on Tuesday at the time of writing, up 0.46% on the day, supported by renewed demand for the US Dollar (USD) amid fresh geopolitical tensions in the Middle East.

Market sentiment deteriorates after comments from United States (US) President Donald Trump stating that the US-Iran ceasefire is on “life support.” According to CNN, several members of his administration are now reportedly considering a resumption of major military operations more seriously. This backdrop revives safe-haven flows and supports the Greenback.

The US Dollar Index (DXY), which measures the US Dollar’s performance against a basket of six major currencies, rises toward 98.30, also supported by increasingly hawkish expectations regarding the Federal Reserve’s (Fed) monetary policy.

Investors are now awaiting the release of the US Consumer Price Index (CPI) for April. Consensus expects annual inflation to accelerate to 3.7% from 3.3% previously, while core inflation is seen rising to 2.7% from 2.6% in March. Stronger-than-expected figures could reinforce expectations that the Fed will keep interest rates higher for longer, further supporting the US Dollar.

On the Swiss side, recent data showed inflation rose for a second consecutive month, although it remains well below the Swiss National Bank’s (SNB) 2% target. Annual inflation reached 0.6% in April after 0.3% in March, while core inflation slowed to 0.3%.

MUFG economists note that the Swiss Franc (CHF) has underperformed since the beginning of the Middle East war, as the SNB has clearly signaled its willingness to limit currency appreciation. SNB Governor Martin Schlegel also downplayed the recent increase in inflation, stating that medium-term price pressures had “hardly changed.”

However, MUFG believes that a prolonged closure of the Strait of Hormuz and a sustained rise in energy prices could push the Swiss National Bank toward a more hawkish stance in the coming months. Money markets are already starting to price in a higher chance of an SNB rate hike by the end of the year.

Swiss Franc Price Today

The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies today. Swiss Franc was the strongest against the British Pound.

USDEURGBPJPYCADAUDNZDCHF
USD0.38%0.59%0.22%0.24%0.35%0.26%0.44%
EUR-0.38%0.20%-0.15%-0.17%-0.03%-0.14%0.07%
GBP-0.59%-0.20%-0.36%-0.38%-0.25%-0.34%-0.15%
JPY-0.22%0.15%0.36%-0.01%0.10%0.02%0.20%
CAD-0.24%0.17%0.38%0.01%0.12%0.03%0.20%
AUD-0.35%0.03%0.25%-0.10%-0.12%-0.08%0.09%
NZD-0.26%0.14%0.34%-0.02%-0.03%0.08%0.17%
CHF-0.44%-0.07%0.15%-0.20%-0.20%-0.09%-0.17%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

More from Ghiles Guezout
Share:

Editor's Picks

AUD/USD eyes 0.7000 as USD remains on the back foot amid softer bond yields

AUD/USD fills a modest bearish gap on Monday, approaching 0.7000 during the Asian session amid holiday-thinned liquidity. The US Dollar remains on the back foot as US bond yields pull back from multi-year highs, supporting the pair. However, the Fed's hawkish outlook and the US-Iran standoff should limit USD losses. Moreover, diminishing odds of another RBA rate hike in November might cap the Aussie.

USD/JPY remains confined in a familiar range around 158.00

USD/JPY extends its range-bound price action at the start of a new week, trading around 158.00 as bulls remain on high alert amid speculation that authorities would step in to prop up the Japanese Yen. Furthermore, softer US bond yields keep US Dollar bulls on the back foot and cap the currency pair. However, geopolitical uncertainties could limit losses for the safe-haven buck amid thin liquidity due to a holiday in Japan and the US.

Gold advances to over one-week top, above $4,200 on softer bond yields/USD

Gold moves above $4,200 on Monday, hitting an over one-week high during the Asian session as softer US bond yields keep US Dollar bulls on the defensive. However, the US-Iran standoff over the Strait of Hormuz, along with a hawkish Fed, could limit USD losses. This could cap non-yielding bullion as traders look to US inflation figures and Fed Chair Kevin Warsh's speech for a fresh impetus during the latter part of this week.

Week ahead: US CPI, France’s budget crisis and Q3 earnings to set the market tone
The US dollar held relatively strong this week, despite the disappointing US jobs report on October 2, which further decreased the probability of a back-to-back rate hike by the Fed at the upcoming gathering on October 28.
Middle East War updates: New attack launched on Saudi airport
Here’s a brief recap of the key developments in the Middle East war that occurred over the weekend, which are expected to have a significant impact on markets in the upcoming week. In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced.
Has Bitcoin really escaped the macro forces it was built to fight?
Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?