USD/CHF holds positive note above 0.9150, eyes on Middle East geopolitical risks
- USD/CHF gains ground around 0.9150 on Monday.
- The hawkish signals from Fed officials and stronger US economic data support the USD.
- The Middle East geopolitical tensions might boost the Swiss Franc and cap the pair’s upside.
The USD/CHF pair trades stronger near 0.9150 during the early European trading hours on Monday. The expectation that the US Federal Reserve (Fed) will start cutting interest rates from the September meeting provides some support to the US Dollar (USD) and lifts the pair. Investors await the Swiss National Bank’s (SNB) Chairman Thomas Jordan's speech on Tuesday for fresh impetus ahead of Switzerland’s Gross Domestic Product (GDP) for Q1.
The hawkish signals from Fed policymakers continue to underpin the Greenback. The US Fed officials emphasized that they would keep borrowing costs higher for longer than expected following a series of disappointing inflation data when inflation remained well above the Fed’s 2% target.
Furthermore, the stronger US economic data on Friday has prompted speculation of a delay in the easing cycle this year. The financial markets have priced in a 53% chance of a Fed rate cut in September, down from the 64% recorded a week ago, according to the CME FedWatch tool. The US Durable Goods Orders came in better than expected, the US Census Bureau reported on Friday. The figure rose by 0.7% MoM in April following a downwardly revised 0.8% advance in March, above the market consensus of -0.8%. Meanwhile, the University of Michigan Consumer Sentiment Index eased to 69.1 in May from 67.4 in April, but was stronger than the estimated 67.5.
On the Swiss front, CNN reported early Monday that at least 35 Palestinians were killed and dozens more were injured as a result of Israeli air attacks on a camp in Rafah for displaced people on Sunday, the Ministry of Health in Gaza said. Market participants will monitor the developments surrounding geopolitical risks in the Middle East. Any signs of rising tension might boost the safe-haven flows, benefiting the Swiss Franc (CHF) and creating a headwind for USD/CHF.