The US Dollar (USD) is strengthening against the Swiss Franc (CHF) as oil-driven inflation concerns boost safe-haven demand. The USD/CHF pair is trading around 0.8260 during Asian hours on Wednesday, recovering from losses posted the previous day. Rising oil prices, fueled by uncertain diplomatic engagements between the US and Iran, have heightened global inflation fears, supporting the USD.
Market sentiment remains cautious as traders evaluate mixed signals from high-level meetings in Tehran involving Pakistan’s army chief and Iranian leaders. While conflict resolution efforts continue, reports of an imminent final agreement between the US and Iran are considered premature. Financial markets are also closely watching the Federal Reserve’s next moves, with an 83.9% probability of rates being held next week and a 90% chance of a hike in December. Fed Chair Kevin Warsh has maintained a neutral stance, leaving markets without a clear signal.
Switzerland’s trade surplus narrowed significantly to CHF 1.31 billion in September, down from CHF 4.2 billion the previous month. This marks the narrowest surplus since November 2022, driven by a 24.9% month-on-month surge in imports. Exports, meanwhile, saw a modest gain of 1.5%. Strategists at UOB Group note that the bearish bias in USD/CHF has been reinforced, with the pair potentially declining further to 0.8200 as long as it holds below 0.8300.