USD Gains Pressure Swiss Franc as Rate Bets Rise Amid Escalating Tensions
The US Dollar (USD) is gaining strength against the Swiss Franc (CHF), extending its winning streak to five sessions. The pair traded around 0.8170 during Asian hours on Friday, with the USD benefiting from renewed demand for safe-haven assets amid escalating tensions in the Middle East.
The conflict has pushed crude oil prices higher, sparking concerns about an oil-led upswing in inflation. This, in turn, has reinforced market expectations that the US Federal Reserve (Fed) could resume raising interest rates. According to the CME FedWatch tool, current money market pricing implies a 35.8% probability of a rate increase this month and an 82.1% chance of at least a quarter-point hike in September.
The Swiss Franc may find some support from Switzerland's 10-year government bond yield, which has climbed toward a roughly two-month high near 0.52%. However, expectations that the Swiss National Bank (SNB) may intervene in foreign exchange markets to sell CHF could restrain any abrupt appreciation in the currency.