The USD/CHF currency pair remains subdued, hovering around 0.8650 during the Asian trading session on Tuesday, following losses from the previous day. The downside of the pair may be limited by the solid performance of the US Dollar (USD), buoyed by rising Treasury yields.
The US Dollar is finding support as market participants exercise caution ahead of the upcoming US election in November. Sentiment is increasingly tilting in favor of Former President Donald Trump, with polling site FiveThirtyEight indicating a 52% probability of his victory compared to 48% for Vice President Kamala Harris.
The US Dollar Index (DXY), which measures the currency’s value against six major counterparts, is trading around 104.30. Meanwhile, 2-year and 10-year US Treasury yields stand at 4.12% and 4.27%, respectively.
Conversely, the Swiss Franc (CHF) faces challenges amid rising expectations for another interest rate cut by the Swiss National Bank (SNB) at its December meeting. Traders are particularly focused on the Consumer Price Index (CPI) for October, set to be released later this week, as it may provide insights into the Swiss economy.
Additionally, the demand for the Swiss Franc as a safe-haven asset may diminish, given the easing concerns over a potential all-out war in the Middle East due to reduced military operations. However, recent statements from Iran’s Foreign Ministry spokesperson, Esmaeil Baghaei, hint at the possibility of utilizing “all available tools” in response to Israel’s recent military actions against Iranian targets, which could still heighten geopolitical tensions.
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