USD\/CHF traded higher near 0.7695 in early Asian trading on Monday. Markets were watching the Middle East conflict and the upcoming ISM Manufacturing PMI for February, due later on Monday.<\/p>\n
The US and Israel began major combat operations in Iran over the weekend. Iran responded with drones and missiles aimed at Israel and US targets, including the United Arab Emirates, Bahrain, Qatar, Kuwait, and Jordan.<\/p>\n
CNBC reported that Iran\u2019s Supreme Leader Ayatollah Ali Khamenei was killed during an ongoing US and Israeli attack against Iran\u2019s leadership and military. Iran\u2019s government is expected to continue operating until a new leader is appointed.<\/p>\n
Further escalation in the region could support safe-haven demand for the Swiss Franc. This could weigh on USD\/CHF.<\/p>\n
US data also remained in focus after the Producer Price Index rose 0.5% month-on-month in January, above the 0.3% forecast. Markets largely expect the Federal Reserve to keep rates unchanged at its March meeting.<\/p>\n
Looking back at the events of early 2025, the initial response to the Mideast escalation was a classic flight to safety. We saw traders pile into the Swiss Franc, pushing USD\/CHF sharply lower as the conflict began. The CBOE Volatility Index (VIX) surged over 45% in a single week, reflecting the deep market uncertainty at that time.<\/p>\n
The conflict immediately triggered an oil price shock, with Brent crude futures soaring above $130 a barrel by April 2025. This surge fed directly into global inflation, validating the concerns we had from hotter-than-expected PPI reports early last year. The sustained energy costs complicated the Federal Reserve’s path, forcing them to maintain a hawkish stance throughout 2025.<\/p>\n
Now in March 2026, the geopolitical risk premium has faded, but the economic fallout persists. Inflationary pressures from last year’s energy shock mean the Fed has kept interest rates higher for longer than anticipated, with the market now pricing in no cuts until the third quarter. The latest US inflation data from January showed core CPI still stubbornly at 2.8%, well above the Fed’s target.<\/p>\n
For derivative traders, this means the USD\/CHF dynamic has completely shifted from a simple safe-haven play. We believe the focus for the coming weeks should be on the widening interest rate differential between the hawkish Fed and the more dovish Swiss National Bank. Options strategies that benefit from a stronger US dollar, such as buying USD calls against the CHF, appear attractive given the persistent US inflation.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CHF rises near 0.7695 as Middle East conflict escalates; markets await ISM PMI and Fed cues.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50471","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50471","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=50471"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50471\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=50471"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=50471"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=50471"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}