USD/CHF Outlook:
The USD/CHF rate is currently below its recent average and near its recent lows. This suggests a bearish outlook, especially considering ongoing geopolitical tensions and their impact on safe-haven demand.
Key drivers:
• Rate gap: The US Federal Reserve's current approach to interest rates contrasts with the Swiss National Bank's focus on addressing the Swiss franc's strength, which could widen the rate gap further.
• Risk/commodities: Growing safe-haven demand for the Swiss franc amid geopolitical unrest, particularly concerning military tensions involving Iran, supports its strength against the dollar.
• One macro factor: The recent U.S. jobless claims drop indicates a robust labor market, but upcoming GDP data could signal growth slowdowns that may influence the USD.
Range:
The USD/CHF rate will likely drift within its recent range, reflecting limited movements given the current pressures.
What could change it:
• Upside risk: A surprising uptick in U.S. economic growth could strengthen the dollar against the franc.
• Downside risk: Further strengthening of the Swiss franc due to potential monetary easing by the Swiss National Bank may further weaken the USD/CHF pair.
