USD/CHF stabilises as the US Dollar receives safe-haven support after reports indicate that Iran has halted indirect negotiations with America. The Greenback experienced an uptick as renewed tensions in the Middle East heightened inflation concerns and bolstered expectations for sustained elevated interest rates from the Federal Reserve. Despite a slight underperformance in GDP, Swiss consumer and industrial activity showcased impressive strength. USD/CHF shows minimal movement following slight gains from the previous day, currently trading near 0.7870 during the Asian session on Tuesday. The pair steadies as the US Dollar remains firm on increased safe-haven demand following reports from Tasnim news agency that Tehran has halted indirect negotiations with the United States. Market participants are anticipating the upcoming release of the Swiss Trade Balance data later today.
According to the report, Iran and its “Resistance Front” allies, which include Yemen, Lebanon, and Iraq, have devised a strategy aimed at entirely obstructing the vital Strait of Hormuz and initiating further fronts, such as the Bab el-Mandeb Strait, as a method of retaliating against Israel and its backers. The escalation was further compounded by a report on X indicating that Iran deployed additional naval mines in the strait last week. These combined developments present a significant challenge to achieving a rapid resolution of the crisis, which has already effectively closed the Strait of Hormuz, a crucial chokepoint for global oil and liquefied natural gas supplies.
Renewed tensions in the Middle East persist in driving global inflation worries and heightening anticipations of sustained Federal Reserve policy rates. Reflecting these persistent inflationary pressures, financial markets are currently pricing in a potential Federal Reserve rate hike before the year concludes, with the CME FedWatch tool indicating a 39% probability of a quarter-point increase in December. On Monday, the latest economic data from Switzerland revealed a mixed yet predominantly robust outlook regarding the nation’s financial stability. On the growth front, Switzerland’s Gross Domestic Product expanded by 0.4% quarter-on-quarter in the three months to March, which was slightly below initial market estimates that had predicted a 0.5% expansion.
Despite the slight GDP shortfall, consumer and industrial activity demonstrated impressive resilience. Retail sales in Switzerland experienced a notable increase of 1.6% year-on-year in April 2026, significantly surpassing market expectations of a modest 0.2% rise and following an upwardly revised gain of 1% in the preceding month. Compounding this positive momentum, the country’s industrial sector experienced a notable enhancement as the procure.ch–UBS Manufacturing PMI increased to 57.3 in May 2026, up from 54.5 in April. This reading significantly surpassed the market forecast of 54, indicating the highest level of manufacturing expansion in Switzerland since July 2022.