Swiss Franc Loses Ground Amid Weaker Retail Sales

The Swiss Franc has held onto its losses following weaker-than-expected Real Retail Sales data in June. The figure came in at 1.5% year-over-year (YoY), falling short of the predicted 3.1% (revised from 3.2%). This decline contributed to the USD/CHF pair's appreciation, as it traded around 0.8070 during Asian hours on Friday.

Broad market sentiment remains cautious, with the US Dollar holding gains driven by hawkish Federal Reserve policy expectations and tensions in the Middle East. However, safe-haven demand may wane alongside easing global risk aversion due to positive diplomatic developments, particularly in the Middle East where US-Iran talks progress toward securing the Strait of Hormuz.

Strategists at BNY Mellon note that the Swiss Franc 'met further resistance this week' following reports that the SNB is likely to keep policy unchanged for an extended period. They add that they are 'surprised the market is reacting to these headlines, given how clear the SNB's conditional forecasts, which explicitly give this guidance, already are.'