The USD/CHF currency pair saw a decline to about 0.7985 during the early hours of European trading on Thursday. This dip is influenced by a recently signed interim agreement between the United States and Iran, which has put pressure on the US dollar against the Swiss franc. Later today, the Swiss National Bank (SNB) is anticipated to disclose its interest rate decision.
On Wednesday, U.S. President Donald Trump and Iranian President Masoud Pezeshkian signed a memorandum of understanding aimed at concluding the US-Israel conflict with Iran. The Prime Minister of Pakistan, Shehbaz Sharif, mentioned that the agreement would take effect “immediately” upon signing by both parties.
At their June policy meeting, U.S. Federal Reserve officials opted to keep interest rates steady within a range of 3.50% to 3.75%, though they did hint at possible increases later in the year, reflecting on inflation concerns stemming from the Iran situation.
Market participants are now factoring in interest rate hikes in the near future, as the U.S. central bank emphasizes maintaining price stability over job growth. This more aggressive posture by the Fed could lend some short-term support to the dollar.
As for the Swiss central bank, economists surveyed by Reuters expect it to maintain its key interest rate at 0% during today’s meeting and likely for the remainder of the year.
“We think that inflation pressures will be less of a concern for the Swiss central bank compared to many others, considering factors like currency fluctuations and energy prices, as well as the generally low inflation in Switzerland,” commented Chiara Angeloni, a European economist at Bank of America. “Our expectation is that zero interest rates will persist until at least the end of 2027.”
