USD/CHF Continues to Fall, US Dollar Under Pressure from Fed Minutes
USD/CHF weakened again on Thursday (July 9th), extending its decline for the second consecutive day. The currency pair was hovering around 0.8065, down 0.15% at the time of writing.
The main pressure came from the weakening US dollar following the release of the minutes of the Federal Reserve's latest meeting. The document showed that Fed officials remained divided on the future direction of interest rates.
Some officials predicted the policy rate would end the year around its current level of 3.6%. However, others believed that additional rate hikes might still be necessary before the end of the year.
This uncertainty caused the US dollar to lose steam. Markets began to doubt whether the Fed would remain aggressive or choose to be more cautious in determining its next policy move.
However, US employment data still showed resilience. Initial Jobless Claims fell to 215,000 in the week ending July 4th, from 217,000 previously. Meanwhile, Continuing Jobless Claims rose slightly to 1.814 million.
However, the US dollar's weakening was restrained by geopolitical factors. Renewed tensions between the United States and Iran have rekindled concerns about energy inflation, particularly if oil supply disruptions recur.
The market now estimates the probability of a Fed rate hike at its next meeting at over 30%, up from less than 20% the previous week. This expectation provides a cushion for the US dollar, despite the pressure.
From the Middle East, Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned that any further US military action would be met with retaliation. He also emphasized that the Strait of Hormuz remains under Iranian control.
Meanwhile, the Swiss franc continues to receive support as a safe-haven asset. Rising geopolitical risks and inflation concerns have kept demand for the Swiss currency strong.
The Swiss National Bank also emphasized its readiness to intervene in the foreign exchange market if necessary. This measure aims to prevent excessive appreciation of the Swiss franc and limit imported inflationary pressures.
For the market, USD/CHF remains under pressure as long as the US dollar is overshadowed by uncertainty about the direction of the Fed's policy. However, geopolitical risks and the possibility of US interest rates remaining high could prevent this currency pair from declining too sharply. (arl)
Source: Newsmaker.id
