Key Moments
- USD/CHF traded around 0.8110 in Asian hours on Tuesday, extending gains for a second consecutive session amid stronger demand for the US Dollar.
- Markets priced in a 64.2% probability of a Federal Reserve rate hike in September, up from 57.8% a day earlier, according to the CME FedWatch Tool.
- Escalating geopolitical risks prompted the Swiss National Bank to reiterate its willingness to intervene in FX markets to limit Swiss Franc appreciation and protect price stability.
USD/CHF Advances as Geopolitical Tensions Support Dollar
USD/CHF continued its upward trajectory for a second straight day, with the pair trading near 0.8110 during Asian trading on Tuesday. The move reflected solid demand for the US Dollar as a safe-haven asset, driven by ongoing hostilities between the United States and Iran. The tensions pushed oil prices higher, reviving worries about inflation and the potential for further interest rate increases.
Pricing in Fed funds futures, as reflected by the CME FedWatch Tool, indicated that market participants assigned a 64.2% probability to a Federal Reserve rate hike in September, compared with 57.8% just one day earlier. At the same time, Federal Reserve officials entered their customary blackout period ahead of next week’s FOMC meeting, where policymakers are widely expected to leave the federal funds rate unchanged.
US-Iran Conflict Escalates, Heightening Regional Risk
US military operations against Iran continued for a tenth consecutive day. These actions have coincided with ongoing retaliatory strikes from Tehran targeting neighboring countries, amplifying instability across the broader region.
SNB Signals Ongoing Vigilance on Franc Strength
Despite maintaining a stable medium-term inflation outlook, the Swiss National Bank has adopted a more cautious tone, as reflected in its recent meeting minutes. The latest escalation in geopolitical tensions has pushed up short-term inflation risks, prompting the SNB to restate its readiness to step into foreign exchange markets to restrain excessive appreciation of the Swiss Franc and to uphold price stability.
Market participants are now watching for the release of Switzerland’s Trade Balance figures for June, scheduled later in the day, for additional insight into the external sector and potential implications for the Franc.
| Indicator / Development | Latest Detail |
|---|---|
| USD/CHF level (Asian hours, Tuesday) | Approximately 0.8110 |
| September Fed hike probability (current) | 64.2% (CME FedWatch Tool) |
| September Fed hike probability (prior day) | 57.8% (CME FedWatch Tool) |
| Duration of ongoing US attacks on Iran | Tenth straight day |
| SNB policy stance | Prepared to intervene in FX markets to curb strong Franc and safeguard price stability |
| Upcoming Swiss data | June Trade Balance (due later in the day) |
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