- USD/CHF will gain further value as US Treasury yields rise and the US dollar strengthens.
- The dollar was also supported by market caution ahead of the US presidential election.
- Safe-haven demand for the Swiss franc has been weak as fears of an all-out war in the Middle East have eased.
USD/CHF extended its decline after losses in the previous session and was trading around 0.8650 during Asian trading on Tuesday. The pair’s losses are likely to be limited as US Treasury yields rise and the US dollar strengthens.
The dollar found support as markets turned cautious ahead of the November US elections. Business sentiment is better for former President Trump. Trump’s chances of winning the US election have risen to 52%, while Vice President Kamala Harris’ chances are 48%, according to polling site FiveThirtyEight.
The U.S. Dollar Index (DXY), which measures the value of six major backed currencies, is currently trading around 104.30, with the U.S. Treasury’s 2-year and 10-year yields at 4.12% and 4.27%, respectively.
The Swiss Franc (CHF) is facing challenges as expectations grow for the Swiss National Bank (SNB) to cut interest rates at its next meeting in December. Traders will likely focus on the October Consumer Price Index (CPI), which is scheduled to be released later this week.
And as military activity slows down and fears of an all-out war in the Middle East ease, demand for the Swiss franc as a safe haven will also decline. But Iranian Foreign Ministry spokesman Esmaeil Baghaei said it was possible to use “all available means” to respond to Israel’s recent attacks on military targets in Iran, according to Reuters.
