CHF

The Swiss franc traded around 0.78 per USD, near record highs, as investors evaluated the Swiss National Bank’s policy outlook following the latest inflation data. Ongoing safe-haven flows also lent support. Swiss inflation rose to 0.6% in April, its highest level in 16 months, driven by rising energy costs linked to the war in the Middle East. The increase marked a second consecutive acceleration and pushed the headline inflation rate above the 0.5% average projected by the SNB for this year and 2027 at its last policy meeting in March. Although the central bank expects the spike in costs to be temporary, with minimal change to medium-term price pressures, this offers breathing space for policymakers, who were previously confronting subdued inflation before the Iran war, driven by the strength of the franc. SNB Chairman Martin Schlegel said last month that higher energy prices should lift inflation further in coming quarters, while growth is likely to remain subdued in the near term.

• USD/CHF gains ahead of Switzerland’s April Consumer Price Index data release scheduled for Tuesday.
• Swiss SVME PMI rose to 54.5 in April, marking a second consecutive month of expansion.
• The US Dollar strengthens on safe-haven demand after Iran’s drone and missile attacks on the UAE.

USD/CHF holds ground for the third consecutive day, trading around 0.7840 during the Asian hours on Tuesday. The Swiss Federal Statistical Office is set to release the April Consumer Price Index (CPI) data later in the day.

On Monday, the Swiss SVME – the Manufacturing Purchasing Managers’ Index (PMI) climbed to 54.5 in April from 53.3 previously, beating expectations of 52.0. This marked a second straight month of expansion and the strongest reading since October 2022. Sentiment in Swiss manufacturing improved despite ongoing volatility in the Middle East.

The USD/CHF pair appreciates as the US Dollar (USD) advances on increased risk aversion following Iran’s attack on the United Arab Emirates (UAE). CNBC reported Monday that the UAE was targeted by Iranian drones and missiles, while the US said it destroyed Iranian boats in the Strait of Hormuz. US President Donald Trump warned that Iran would be “blown off the face of the earth” if it targets US ships protecting commercial vessels passing through the Strait.

Iran’s Foreign Minister Abbas Araghchi said the current situation in the Strait of Hormuz shows “clearly that there is no military solution to a political crisis.” “As talks are progressing with Pakistan’s gracious effort, the US should be cautious about being pulled back into a quagmire by ill-wishers. The same applies to the UAE,” Araghchi wrote in a post on X. “Project Freedom is Project Deadlock,” he added.

The Greenback strengthens as Treasury yields rise alongside expectations that the Federal Reserve (Fed) may need to lift interest rates to curb inflation. Minneapolis Fed President Neel Kashkari said Sunday that additional rate hikes cannot be ruled out, especially as inflation risks remain elevated due to higher energy prices linked to the Iran conflict.

• USD/CHF struggles as the US Dollar weakens on easing safe-haven demand, with traders monitoring progress in US–Iran talks.
• Trump signaled Tehran’s latest peace proposal may fall short, expressing doubts over its acceptability.
• Donald Trump said the US will escort neutral ships through the Strait of Hormuz starting on Monday.

USD/CHF depreciates after registering slight gains the previous day, trading around 0.7810 during Asian hours on Monday. The pair struggles as the US Dollar (USD) declines amid easing safe-haven demand, with traders assessing progress in US–Iran peace negotiations. Swiss SVME Manufacturing Purchasing Managers’ Index (PMI) will be eyed later in the day.

Data released on Friday showed that Switzerland’s real retail sales rose by 0.5% YoY in March, falling short of market expectations for a 1% increase, after a downwardly revised 0.4% gain in the prior month. On a seasonally adjusted monthly basis, sales posted a modest 0.1% rise, following a revised 0.1% decline recorded in February.

Mediation efforts to end the conflict have continued as the war in Iran enters its third month. Donald Trump hinted that Tehran’s latest peace proposal may fall short of expectations, Bloomberg reported Sunday. Iran has proposed setting a one-month deadline for talks aimed at reopening the Strait of Hormuz and ending both the US naval blockade and the conflicts in Iran and Lebanon.

Another Bloomberg report indicated on Sunday that Donald Trump said the United States will begin guiding neutral ships trapped in the Persian Gulf out through the Strait of Hormuz starting Monday. The initiative is intended to help civilian vessels from non-aligned countries exit the contested waterway and resume normal operations.

However, an Iranian official warned that US interference in Hormuz will be considered a violation of the ceasefire, adding that the Strait of Hormuz and the Persian Gulf are not a place for rhetoric. Traders will closely monitor the developments surrounding the Middle East conflict and a continued blockade of the Strait of Hormuz.

Traders are likely awaiting the upcoming US employment report for April later this week. The US economy is expected to see 73K job additions in April, while the Unemployment Rate is projected to remain steady at 4.3% during the same period.