USD/CHF Strengthens, Franc Pressured by Risk-Off and Swiss Inflation
USD/CHF continued its rise for a second day and traded around 0.7970 during the Asian session on Monday (August 6). The US dollar strengthened as safe-haven demand increased after the Israeli military reported that a missile launched from Yemen towards Israeli territory was successfully intercepted.
Regional tensions returned to the spotlight after reports of air raid sirens being heard in Tel Aviv. The attack from Yemen, attributed to the Iran-backed Houthi group, emphasized that the escalation in the Middle East has not subsided and further weighed on global risk sentiment.
From the US side, support for the dollar also came from strong labor data. The May Nonfarm Payrolls (NFP) rose by 172,000 with unemployment remaining at 4.3%, reinforcing the view that the Federal Reserve has room to maintain tight policy for longer—even opening the door to interest rate hikes if inflation persists.
Conversely, the Swiss franc weakened after Swiss inflation in May came in at just 0.6%, below the 0.8% forecast. This data lowered expectations for SNB tightening and increased market confidence that Swiss interest rates will remain very low for a longer period.
The combination of "risk-off boosting the USD" and "soft Swiss inflation holding back the CHF" keeps USD/CHF supported in the short term. Its future direction will be heavily influenced by Middle Eastern headlines and further signals from the Fed and SNB regarding inflation and interest rates. (asd)
Source: Newsmaker.id
