Ella 
Affected by the situation in the Middle East and the Federal Reserve’s dovish outlook for 2024, USD/CHF continues to fall. During the Asian session on Tuesday, the pair traded lower near 0.8670.
Tensions between Israel and Hamas appear to have escalated as the Iranian-led Houthi rebel group launched attacks on commercial ships near Libya. Major shipping companies are considering avoiding the Suez Canal channel. This has triggered risk aversion on trade and supply, potentially leading investors to turn to the safe-haven currency the Swiss franc.
However, the Swiss franc (CHF) faced a roadblock when the Swiss National Bank (SNB) announced it was keeping interest rates unchanged for the second time in a row. Thomas Jordan, chairman of the Swiss National Bank, acknowledged a slight decline in inflationary pressures and stressed that uncertainty remained high.
The U.S. dollar (USD) is facing challenges due to weak sentiment, mainly influenced by the dovish statement from the Federal Open Market Committee (FOMC). In addition, dovish comments from many Federal Reserve members also put pressure on the dollar. However, New York Fed President John Williams dismissed speculation that the FOMC might cut interest rates in March.
In addition, San Francisco Fed President Mary Daly mentioned that even if there are three interest rate cuts next year, the Fed will maintain a relatively restrictive stance. It is too early to guess which meetings next year may witness a shift in policy stance. Daley stressed that work is ongoing and the focus is not just on getting inflation down to 2%.
