Solid Gold Berjangka – The USD/CHF pair weakened again during Asian trading on Wednesday (Nov 4), hovering around 0.8170 after surrendering some of its gains from the previous session. The pressure stems primarily from a weaker US dollar, following midterm election results that have heightened uncertainty regarding the direction of fiscal policy and the balance of power in Congress.
Election developments point to a stronger position for the Democratic Party in the House of Representatives, leading the market to factor in the possibility of a change in Congressional leadership and more limited scope for President Donald Trump’s administration to pursue its fiscal agenda. This uncertainty has dampened demand for the dollar, creating room for the Swiss franc to strengthen.
Beyond political factors, the market is also monitoring developments in the US-Iran conflict. Washington and Tehran are currently reviewing proposals put forward by mediators—following reports of a US strike on Qeshm Island—though diplomatic efforts have yet to yield a breakthrough. While easing energy prices could alleviate inflationary pressure, geopolitical risks continue to keep market volatility high.
Despite the pressure on the dollar, expectations regarding Federal Reserve policy provide some support. The market currently assigns a roughly 79% probability that the Fed will raise interest rates in December; consequently, any further decline in the dollar may be limited, provided that US economic data remains robust and inflationary pressures persist.
On the Swiss side, the franc has found support following an uptick in October inflation to 1.5%—its highest level in nearly three years—driven largely by rising costs for imported energy. Although this remains within the Swiss National Bank’s target range of 0%–2%, the acceleration in inflation has led the market to consider the possibility of an earlier interest rate hike, potentially as soon as 2027. These conditions are likely to keep pressure on the USD/CHF pair in the near term. (srh)