Back to the Blog Main Page
09/07/26
42
USD/CHF Falls as Fed Minutes and Geopolitical Risks Weigh on Dollar
USD/CHF extended its decline for a second straight session on Thursday, holding near 0.8070 in Asian trading as the US Dollar softened after the release of the Federal Reserve’s latest meeting minutes. The tone of the minutes suggested that policymakers remain divided over the direction of rates, adding uncertainty to the outlook for the dollar.
During the June 16-17 meeting, officials appeared split between those who expect the benchmark rate to end the year around its current 3.6% level or slightly lower, and those who believe additional tightening may still be needed before year-end. The disagreement has reinforced the view that the Fed may keep borrowing costs elevated for longer in order to contain persistent inflation pressures.
Market pricing has already begun to reflect that possibility. CME FedWatch data indicate that traders now see more than a 30% chance of a rate increase at the next Fed meeting, up sharply from less than 20% a week earlier. That shift has helped limit the dollar’s losses, even as broader expectations for near-term Fed policy remain unsettled.
At the same time, geopolitical tensions between the United States and Iran are supporting demand for the dollar as a defensive asset. Fresh warnings from Iranian officials after renewed US strikes have revived concern over possible disruption to energy flows, particularly through the Strait of Hormuz. Those risks have lifted inflation concerns and strengthened the case for higher interest rates to remain in place for longer.
The Swiss franc is also drawing support from safe-haven demand, with investors seeking protection amid both policy uncertainty and rising geopolitical risk. Still, the Swiss National Bank has reiterated that it stands ready to intervene in foreign exchange markets if necessary to restrain excessive franc strength and reduce imported inflation.
Promotions
