The Swiss franc traded around 0.81 per USD, hovering near its highest levels since 2011, amid a broad flight to safety driven by escalating tensions in the Middle East. Israel has launched a wave of strikes against Iran, targeting its nuclear infrastructure and military installations, killing two senior commanders. The Israeli government has warned of further action, while Iran has vowed retaliation. In addition to geopolitical risk, several other factors have contributed to the franc’s strength which is up about 10% so far this year.
These include uncertainty surrounding President Trump’s trade policies and broad-based dollar weakness, triggered by cooler inflation data and growing concerns over the US economic and fiscal outlook. Domestically, the Swiss National Bank (SNB) may soon reintroduce negative interest rates. Markets widely anticipate that the SNB will cut its key rate next week with some analysts even suggesting a move back into negative territory.
