Forex News

TD Securities economists Oscar Munoz and Eli Nir highlight that the June FOMC minutes were hawkish, with most participants ready to hike if supply-driven inflation persists. They still project the Fed will keep rates on hold through 2026, as output growth moves sideways and stagflationary risks from the Iran conflict keep inflation elevated while the labor market stabilizes.

Hawkish minutes but steady policy

"The June FOMC minutes last week were hawkish, highlighting inflation risks and showing most participants would support hikes if supply-driven price pressures persist, even with a stable labor market."

"While we continue to see an indefinite hold for the Fed, higher inflation over the next few months could be enough to produce hikes, even if the labor market does not accelerate."

"We expect the Fed to remain on hold over our forecast horizon."

"Inflation should remain high for the rest of the year, and the labor market has stabilized, allowing the FOMC to shift focus to its inflation mandate."

"If the Fed were to move this year, we believe that move is more likely to be a hike than a cut."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Commerzbank’s Dr. Jörg Krämer describes Switzerland’s strong federalism and extensive use of financial referenda as key to its superior economic outcomes. Cantons and municipalities compete for taxpayers by setting their own tax rates and controlling spending. Citizen votes on projects and tax levels restrain government size, keeping expenditure and indebtedness lower and supporting a more dynamic economy than Germany’s.

Swiss model of competition and restraint

"Federalism in Switzerland does not only mean that decisions which affect only certain municipalities or cantons are also taken there. In addition, the cantons and many municipalities are financially much more autonomous than the corresponding jurisdictions in Germany; they can set the level of income tax and many other taxes"

"To attract taxpayers, they are forced to offer attractive infrastructure at the lowest possible cost, i.e. with low taxes. Competition for taxpayers reduces the power of the state and promotes efficient government structures."

"In these referenda, citizens vote not only on planned major investment projects, as in Germany, but also on the loans required to finance them. As a result, voters become aware not only of the benefits but also of the costs of a project."

"Furthermore, citizens are allowed to decide on tax rates within the framework of referenda – including at the federal level. It is therefore much more difficult for Swiss politicians to push through high spending and high taxes."

"This prevents that the state gets too big which would deprive citizens and companies of too many resources and weaken the economy."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

The Swiss Franc (CHF) trades in a tight range against the Euro (EUR) as the Swiss National Bank (SNB) actively works to neutralize safe-haven capital inflows stemming from increased geopolitical woes. 

While the European Central Bank's (ECB) restrictive monetary policy and recent rate hikes have provided a steady tailwind for the Euro, the SNB has leaned heavily into direct foreign exchange interventions to prevent an excessive appreciation of the Franc. Consequently, macro analysts project a period of near-term consolidation for the cross.

ECB hawkishness shields Euro from safe-haven Swiss Franc strength

Senior FX strategy experts at Rabobank note that the persistent hawkishness of the ECB has effectively relieved the intense downward pressure that previously plagued the EUR/CHF exchange rate. Although a modest rebound in the pair from its recent lows has raised some concerns about imported inflation creeping into Switzerland during the third quarter, the Euro remains structurally supported by the contrast in central bank postures. If Eurozone policymakers extend their tightening cycle, it could eventually force the SNB to contemplate its own move toward the turn of the year.

That said, the hawkishness of the ECB will have relieved some pressure on the EUR/CHF exchange rate and thus on the SNB. We expect further consolidation around the EUR/CHF 0.92 area on a 3-month view with potential for a slight upside bias reflecting ECB hawkishness.

SNB relies on active currency intervention to curb Franc appreciation

Rabobank highlights that the SNB has been pushing back against speculative Franc buying. Official data confirms that the central bank purchased billions in foreign currency during the first quarter to actively depress the local currency's value. With domestic inflation remaining low and growth risks appearing modest, SNB President Martin Schlegel has reaffirmed that direct market intervention remains the bank’s preferred first line of defense.

For now, we expect that the SNB’s focus will remain on emphasising that FX intervention is a policy tool with the aim of dissuading speculative buying and preventing the CHF from appreciating.

Analysts anticipate a range-bound trajectory for the Euro-Swiss cross

Banks anticipate a range-bound near-term trend for the EUR/CHF pair. Rabobank projects that the currency cross will closely orbit the 0.9200 threshold over a three-month horizon, supported by a mild upside bias from the ECB's relative hawkishness. However, because any aggressive appreciation of the Swiss Franc will be met with swift, unannounced currency sales by the SNB, the pair is expected to remain firmly trapped in a well-defined lateral band for the foreseeable future.

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Iran’s top joint military command issued a series of warnings on Monday over the Strait of Hormuz, saying any unauthorized United States (US) transit would be confronted and cautioning neighboring countries against supporting Washington.

Key takeaways:

Iran will not allow the United States to intervene in the management of the Strait of Hormuz.
Any attempt by the United States to transit through the Strait without Iran’s authorization will be strongly confronted.
To the leaders of regional countries, any cooperation with the United States will be considered war against Iran.
If the war widens, it will reach all the countries of the region. Responsibility lies with the United States and its allies.”

• Silver falls more than 2% as energy-driven inflation concerns strengthen expectations of a Fed rate hike.
• Traders await Tuesday’s US CPI data for fresh clues on the interest rate outlook.
• XAG/USD remains range-bound between $55.50 and $62.50, with the broader bias tilted lower.

Silver (XAG/USD) attracts sellers on Monday after renewed fighting between the United States (US) and Iran over the weekend revived energy-driven inflation concerns and reinforced expectations of a Federal Reserve (Fed) interest rate hike later this year.

At the time of writing, XAG/USD trades around $58.30, down more than 2% on the day.

According to the CME FedWatch Tool, traders are currently pricing in a 71% chance of a rate hike in September, up from 57% a week earlier. Higher borrowing costs tend to weigh on non-yielding assets such as Silver.

The US economic calendar is light on Monday, leaving traders focused on geopolitical headlines. Attention then turns to the US Consumer Price Index (CPI) data on Tuesday, which could shape near-term interest rate expectations and drive the next move in XAG/USD.

On the daily chart, XAG/USD remains largely range-bound between $55.50 and $62.50, a structure in place since late June. Silver holds well below the 200-day Simple Moving Average (SMA) at $70.37 and the 100-day SMA at $73.87, keeping the broader bias tilted to the downside.

Momentum remains weak, with the Relative Strength Index (RSI) near 37 staying below the neutral 50 level. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator hovers slightly in positive territory, pointing to a modest loss of selling momentum but falling short of confirming a recovery.

On the upside, initial resistance stands at the upper boundary of the range around $62.50. A clear break above this level could open the door toward the 200-day SMA at $70.37, followed by the 100-day SMA at $73.87.

On the downside, the $55.50 level remains the key support. A decisive break below this floor would end the current consolidation phase and expose Silver to another leg lower.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

BNY’s Geoff Yu highlights that Japan remains a key source of two‑way FX volatility as markets digest conflicting signals on Government Pension Investment Fund (GPIF) allocations. A Reuters report suggested no immediate overhaul of the fund’s target mix, tempering aggressive repatriation expectations. However, potential shifts toward domestic assets and broader home‑bias questions keep the APAC (Asia-Pacific) FX status quo fragile for USD/JPY.

GPIF stance and APAC FX fragility

"Japan remains a source of two-way FX volatility: The Reuters report that there is no immediate plan to overhaul GPIF allocations should cool the most aggressive repatriation narrative, but the debate still matters."

"Even within existing bands, a larger domestic allocation would reinforce the broader home bias question across North Asia’s savings base."

"The APAC FX status quo remains fragile, but convergence means adjustment is more likely to come through risk reduction than a clean valuation catch-up."

"JPY fell as Reuters reported that Japan’s state pension fund policy remained unchanged, with no immediate plans to alter the Government Pension Investment Fund’s target asset mix."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

MUFG’s Lee Hardman notes the US Dollar (USD) has gained modestly as renewed US–Iran tensions lift Brent Oil back to USD80, with markets rebuilding a geopolitical risk premium. He highlights that higher Oil prices could reinforce upside US inflation risks just as the Fed considers further rate hikes, with June Consumer Price Index (CPI) and Chair Warsh’s semi-annual testimony seen as key for Dollar direction.

Geopolitics, Oil and Fed inflation risks

"The US dollar has strengthened modestly at the start of this week encouraged by renewed military tensions between the US and Iran."

"The spill-over effects into the foreign exchange market remain relatively modest so far."

"A significantly higher price of oil has the potential to be a more powerful bullish catalyst for the US dollar now that the Fed has indicated recently that it is considering raising rates in response to upside inflation risks."

"However, it has the potential to exert a more meaningful influence on inflation and Fed policy going forward.

"Another benign core reading, alongside easing energy inflation, would likely encourage market participants to pare back expectations for further Fed rate hikes, putting a dampener on US dollar strength in the week ahead.""

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Rabobank's Senior FX Strategist Jane Foley describes how the Swiss National Bank has actively countered safe haven inflows into the Swiss Franc since the Iran war, selling CHF and signalling increased willingness to intervene. With low inflation and modest growth risks, the Swiss National Bank (SNB) is expected to keep FX intervention as a key tool while rate hike prospects remain finely balanced.

SNB balances FX and policy risks

"Indeed, SNB data confirms that the authorities sold CHF in Q1 this year suggesting that intervention did occur."

"It has been reported that the SNB purchased CHF3.9 bln worth of foreign currency in the first three months of this year."

"Last week SNB President Schlegel repeated the warnings that the central bank was ready to intervene in the market if needed."

"For now, we expect that the SNB’s focus will remain on emphasising that FX intervention is a policy tool with the aim of dissuading speculative buying and preventing the CHF from appreciating."

"While the risks of a SNB rate hike would increase if the ECB extends its hawkish position, tightening potential is still finely balanced given the continued relative strength of the CHF."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

BNY's Geoff Yu notes that renewed U.S.-Iran tensions have lifted Brent and WTI, with markets reassessing energy supply risks and broader risk sentiment. Yu stresses that the Strait of Hormuz is now the key macro channel, as sustained Oil pressure could complicate central bank responses by combining sticky inflation, weaker consumption and reduced policy flexibility in coming months.

Energy shock and policy constraints

"The Strait of Hormuz is the core macro channel: Renewed U.S.-Iran escalation has pushed oil higher, but the bigger issue is how sustained energy pressure will constrain central banks’ ability to react."

"If oil pressure persists, the market will have to price in a less comfortable mix of sticky inflation, weaker consumption and reduced policy flexibility."

"Duration can be kept light while oil is pushing inflation risk higher, and crowded AI/semiconductor beta can be trimmed where flow and positioning are carrying prices more than earnings."

"Investors may wish to rebuild energy positions selectively where exposure has been cut too far, but avoid chasing a full crisis premium."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)