Key Moments
- USD/CHF traded near 0.7785 in the Asian session as the pair retained opening gains.
- The US rejected Iran’s response to its peace proposal, dampening expectations for a near-term truce.
- Traders are watching President Trump’s May 13-15 visit to China for potential developments related to Iran.
Swiss Franc Slips as Risk-Off Flows Support the Dollar
The USD/CHF pair held firm around 0.7785 during Monday’s Asian trading, with the US Dollar outperforming most major currencies. The move reflected renewed risk-off sentiment as prospects for an imminent agreement between the United States and Iran weakened.
The Swiss Franc underperformance came as the Greenback gained broadly, supported by geopolitical uncertainty and fading optimism over a swift resolution to US-Iran tensions.
Dollar Performance Against Major Currencies
On the day, the US Dollar showed broad-based strength, particularly against the New Zealand Dollar. The following table presents the percentage change of the US Dollar versus a basket of major currencies, along with cross-moves among the majors.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | – | 0.24% | 0.31% | 0.31% | 0.08% | 0.21% | 0.34% | 0.30% |
| EUR | -0.24% | – | 0.08% | 0.04% | -0.19% | -0.02% | 0.11% | 0.06% |
| GBP | -0.31% | -0.08% | – | 0.00% | -0.26% | -0.09% | 0.02% | -0.02% |
| JPY | -0.31% | -0.04% | 0.00% | – | -0.24% | -0.06% | 0.05% | -0.01% |
| CAD | -0.08% | 0.19% | 0.26% | 0.24% | – | 0.17% | 0.24% | 0.23% |
| AUD | -0.21% | 0.02% | 0.09% | 0.06% | -0.17% | – | 0.11% | 0.07% |
| NZD | -0.34% | -0.11% | -0.02% | -0.05% | -0.24% | -0.11% | – | -0.03% |
| CHF | -0.30% | -0.06% | 0.02% | 0.00% | -0.23% | -0.07% | 0.03% | – |
The heat map is read by selecting the base currency from the left-hand column and the quote currency from the top row. For instance, choosing the US Dollar as the base and moving horizontally to the Japanese Yen cell shows the percentage move in USD (base)/JPY (quote).
DXY Strengthens as Equities Signal Caution
At press time, the US Dollar Index (DXY), which measures the US currency against six major peers, was trading 0.25% higher near 98.10. Equity sentiment was softer, with S&P 500 futures down 0.15% at 7,390, pointing to a cautious risk backdrop.
US-Iran Tensions and Market Reaction
Over the weekend, US President Donald Trump stated via social media that Iran’s reaction to Washington’s peace proposal is “totally unacceptable”. Iranian state media reported that Tehran’s counterproposal calls for US compensation for war-related damages and formal acknowledgment of Iran’s authority over the Strait of Hormuz, described as a key route for nearly 20% of global energy flows, according to CNN. The proposal also includes demands for the release of frozen Iranian assets and the removal of sanctions.
Reduced expectations for a lasting ceasefire between the US and Iran in the short term have supported global oil prices. These developments, together with strong April Nonfarm Payrolls (NFP) data, have stirred concerns that the Federal Reserve might opt to increase interest rates this year.
Focus Shifts to Trump’s Upcoming China Trip
Market participants are now looking ahead to President Trump’s visit to China from May 13 to May 15. Analysts at IG markets noted that market experts believe Trump will press Beijing to use its leverage over Iran to push for a broader ceasefire and address energy supply disruptions linked to the situation around the Strait of Hormuz.
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