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Source: Newsmaker.id
The USD/CHF pair weakened for the third consecutive day, trading around 0.8220 on Friday (October 30). The pressure on the pair stems from a softer US dollar, as optimism surrounding US-Iran diplomatic efforts has dampened demand for safe-haven assets.
Easing tensions in the Middle East have also reduced concerns regarding potential oil supply disruptions and inflationary pressures. Consequently, the probability of a Federal Reserve interest rate hike in December has fallen to approximately 75%, down from 84.2% the previous day.
Diplomatic efforts have returned to the spotlight following US Vice President JD Vance’s outreach to Mohsen Rezaei, aimed at resuming peace talks with Iran. This move, which has the backing of President Donald Trump, has helped alleviate some of the geopolitical risk premium.
However, the decline in USD/CHF may be limited, as the Swiss franc remains under pressure from "carry trade" activity. With Swiss interest rates at near-zero levels, the franc is frequently used as a funding currency—investors borrow the franc to finance the purchase of higher-yielding assets.
Meanwhile, the Swiss National Bank (SNB) has maintained its interest rate at 0% and sees no immediate need for a policy shift. Newsmaker Analysis: While a weaker US dollar and diminished expectations for a Fed rate hike favor a decline in USD/CHF, the low Swiss interest rate environment constrains the franc’s appreciation. Future movements will likely be shaped by developments in US-Iran diplomacy, as well as the policy trajectories of the Fed and the SNB. (srh)
Source: Newsmaker.id