Dollar Strengthens, Swiss Franc Under Pressure Amid US-Iran Conflict
The US dollar strengthened against the Swiss franc on Friday (July 24th), extending its five-day rally. The USD/CHF pair traded around 0.8170 during the Asian session.
The dollar's strengthening was driven by increased demand for safe haven assets amid the escalating conflict between the United States and Iran. These tensions also pushed up oil prices and raised concerns about inflation.
According to the CME FedWatch Tool, the market estimates a 35.8% chance of a Fed rate hike in July. Meanwhile, the probability of a rate hike of at least 25 basis points in September reached 82.1%.
Geopolitical sentiment increased after the Houthi group attacked two Saudi oil tankers in the Red Sea. The United States then resumed its military attacks on Iran for the 13th consecutive night.
President Donald Trump also threatened to impose severe military sanctions on Iran and the Houthis if attacks recur. These conditions maintained demand for the dollar, even though the yield on 10-year Swiss government bonds rose to around 0.52%.
The rise in bond yields could provide support for the Swiss franc. However, potential intervention by the Swiss National Bank to sell francs is expected to limit its gains, so USD/CHF still has the potential to strengthen as long as the conflict and inflation concerns remain unabated. (asd)*
Source: Newsmaker.id
