Swiss Franc holds below 0.8100 US Dollar with US-Iran negotiations deadlocked
The Swiss Franc trades practically flat against the US Dollar (USD) on Tuesday, consolidating halfway through last week’s trading range.
On Tuesday, the Swiss Franc remained near the 0.8100 level against the US Dollar, with the USD/CHF pair rebounding from Friday's lows above 0.8050. Concerns surrounding the US-Iran peace talks and hawkish remarks from Federal Reserve officials contributed to market uncertainty, with FX volatility remaining limited ahead of the US Consumer Price Index release.
The lack of significant macroeconomic data on Tuesday allowed Middle Eastern developments to drive the market, with expectations of a swift resolution to the conflict receding. US officials indicated that a possible rate hike might be necessary more than once to meet inflation targets, bolstering the US Dollar amid potential upside from the US Nonfarm Payrolls report.
Despite the subdued risk environment, OCBC analysts predict that the Swiss Franc's weakness will likely continue into the year-end due to growing carry trade funding demand and the Swiss National Bank's comfort with a weaker currency.
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