Safe Havens Clash, USD/CHF Remains Higher
USD/CHF continued its rise for the fourth consecutive day on Thursday (July 23rd). The pair hovered around 0.8150 during the European session, supported by a strengthening US dollar amid escalating geopolitical tensions between the United States and Iran.
The US dollar received another boost after US Secretary of State Marco Rubio warned that military strikes against Iran could intensify if Tehran persists in refusing to negotiate. Rubio said pressure on Iran would continue to increase until the country changes its stance.
Regional tensions also escalated after President Donald Trump threatened to attack Iranian infrastructure if ships in the Strait of Hormuz were again targeted. Tehran retaliated with threats against US-linked energy assets.
Risks widened after Iran-backed Houthis fired missiles and drones at two Saudi Arabian oil tankers in the Red Sea. This attack poses a new threat to Saudi oil export routes and opens a dangerous front beyond the Strait of Hormuz.
Meanwhile, the Swiss franc still has the potential to receive support from rising Swiss bond yields. The yield on the 10-year Swiss government bond rose to nearly 0.49%, its highest level in about two months, as the market became concerned about energy inflation and the direction of monetary policy.
Consequently, the USD/CHF market still has the potential to remain strong as long as the US dollar is supported by safe havens and the Middle East conflict remains unabated. However, the rise in the Swiss franc could limit the pair's gains if investors also seek safe assets in Switzerland. The market is also monitoring the possibility of SNB intervention if the CHF's appreciation is deemed too sharp. (arl)
Source: Newsmaker.id
