During the Asian session on Thursday, the USD/CHF currency pair hovered around 0.8520, maintaining a downward trend for the fifth consecutive day. The Swiss Franc (CHF) could see increased support from safe-haven flows due to the ongoing impasse in the Israel-Hamas conflict, raising concerns of a broader Middle Eastern conflict.
On Wednesday, US President Joe Biden pressed Israeli Prime Minister Benjamin Netanyahu to focus on negotiating a truce in Gaza and securing the release of hostages. Despite this, both Israel and Hamas have held firm on their demands. This conversation, which also involved Vice President Kamala Harris, followed reports from Palestinian health officials indicating that Israeli airstrikes had killed at least 50 Palestinians within a 24-hour period, as reported by Reuters.
Commerzbank FX Analyst Michael Pfister noted that recent market volatility has increased demand for safe-haven assets like the Swiss franc. Despite this, Pfister forecasts a moderate weakening of the CHF in the coming months, anticipating that the Swiss National Bank (SNB) may further lower interest rates.
The US Dollar (USD) has edged up, supported by improved Treasury yields. This uptick is partly due to market caution ahead of Federal Reserve Chair Jerome Powell’s keynote speech at the Jackson Hole Annual Symposium on Friday. Additionally, the FOMC Minutes from July’s policy meeting revealed that most Fed officials expect to lower the benchmark interest rate in September, provided inflation continues to decline. Traders are closely awaiting Powell’s speech for further insights.
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