The USD/CHF currency pair has edged lower, trading around 0.8520 during the Asian session on Friday, as the US Dollar (USD) loses ground ahead of a highly anticipated speech by US Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium later in the North American session. Market participants are keenly awaiting Powell’s comments on potential interest rate cuts in the United States.
The US Dollar Index (DXY), which gauges the USD’s value against six major currencies, faces pressure from declining US Treasury yields. The DXY is currently at 101.30, with 2-year and 10-year US Treasury yields at 3.99% and 3.85%, respectively.
On Thursday, Federal Reserve Bank of Boston President Susan Collins suggested that it might soon be appropriate to start reducing rates, depending on forthcoming economic data. Meanwhile, Kansas City Fed President Jeff Schmid noted that he is monitoring the increase in the unemployment rate and will rely on data to decide whether to support a rate cut in the next meeting.
The Swiss Franc (CHF) could strengthen further as a safe-haven asset amid ongoing geopolitical tensions. The deadlock in securing a truce between Israel and Hamas has heightened the risk of a broader Middle Eastern conflict. Disagreements over Israel’s military actions in Gaza and Palestinian prisoner releases are obstructing progress toward a ceasefire and hostage deal, according to sources including Hamas officials and Western diplomats.
Commerzbank FX Analyst Michael Pfister anticipates moderate weakness for the CHF in the near term, predicting that the Swiss National Bank (SNB) may further reduce interest rates. However, Pfister also highlighted that global demand for safe-haven assets is likely to remain robust due to ongoing uncertainties.
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