- USD/CHF as safe-haven dollar demand grew amid US-Iran tensions.
- The CME FedWatch Tool shows September Fed rate hike odds rose to 64.2%, up from 57.8% a day earlier.
- Rising geopolitical risks pushed the SNB to reiterate FX interventions to curb a surging franc and safeguard price stability.
USD/CHF extends its gains for the second successive day, trading around 0.8110 during the Asian hours on Tuesday. The pair appreciates as the US Dollar (USD) receives support from rising safe-haven demand amid ongoing hostilities between the United States (US) and Iran, which drove oil prices higher, reviving concerns about inflation and interest rate hikes.
CME FedWatch Tool suggests that markets price in 64.2% odds of a September Fed rate hike, compared to 57.8% a day earlier. In the meantime, Federal Reserve officials have entered their traditional blackout period ahead of next week’s FOMC meeting, where policymakers are widely anticipated to hold the federal funds rate steady.
US attacks on Iran continued for a tenth straight day. The ongoing campaign has coincided with continued retaliatory strikes from Tehran against neighboring countries, further escalating instability across the region.
Although the Swiss National Bank (SNB) maintains a stable medium-term inflation outlook, recent meeting minutes reveal growing caution among policymakers. Escalating geopolitical tensions have increased short-term inflation risks, leading the SNB to reaffirm its readiness to intervene in foreign exchange markets to curb excessive franc appreciation and safeguard price stability. Investors now turn their attention to June’s Trade Balance data, scheduled for release later in the day.
