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- USD/CHF rises as safe-haven US Dollar demand increased after Israel intercepted a missile fired from Yemen.
- The Greenback may further advance as strong US jobs data boost expectations of a Fed interest rate hike this year.
- The Swiss Franc struggles after May inflation fell to 0.6%, missing the 0.8% forecast and reducing rate hike expectations.
USD/CHF extends its gains for the second successive day, trading around 0.7970 during the Asian hours on Monday. The pair gains ground as the US Dollar (USD) remains firm amid increased safe-haven demand after the Israeli military stated a missile had been launched from Yemen towards Israeli territory, which has been intercepted by its aerial defense systems.
The Guardian reported that air raid sirens sounded in Tel Aviv, following the attack from Yemen. The retaliatory attacks from Yemen, whose military force, the Houthis, is backed by Iran, reflect that conflicts in the Middle East have started again.
The BBC reported on Monday that the Israel Defense Forces (IDF) reportedly struck military targets in Iran following an Iranian missile salvo aimed at northern Israel. This escalation occurred despite US President Donald Trump’s criticism of previous Israeli strikes in Beirut and his active push for a diplomatic resolution between Prime Minister Netanyahu and Tehran.
Earlier, Iran launched multiple rounds of missiles toward Israel, warning against further military action in Lebanon and threatening a fragile ceasefire amidst stalled peace negotiations. Although Israel’s military reported that all incoming missiles were successfully intercepted with no casualties, the escalation severely rattled energy markets.
The Greenback received support after stronger-than-expected US employment data reinforced expectations that the Federal Reserve (Fed) could raise interest rates later this year. US Nonfarm Payrolls (NFP) increased by 172,000 jobs in May, compared to 179,000 (revised from 115,000) in the previous reading, and the Unemployment Rate held at 4.3% during the same period.
The Swiss Franc (CHF) weakened against the US Dollar after May’s inflation came in at 0.6%, missing the 0.8% forecast and dampening rate-hike expectations. Despite the slight rise, Swiss National Bank (SNB) Chairman Martin Schlegel noted that medium-term inflation pressures remain stable. Consequently, investors now expect the SNB to hold its key interest rate steady at 0% through 2026.
