11/06/26

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USD/CHF edged lower after four consecutive sessions of gains, trading near 0.7990 during Asian hours on Thursday. Even so, the pair’s downside may remain limited as the US Dollar finds support from renewed safe-haven demand amid escalating tensions in the Middle East.

The security backdrop deteriorated further after Israel’s military said its Home Front Command issued an early warning following launches from Lebanon toward northern Israel. At the same time, the US Central Command confirmed that American forces carried out airstrikes in Iran on Wednesday, underscoring the widening scope of the confrontation.

US President Donald Trump has warned of severe military action if an interim peace agreement is not reached, while accusing Tehran of delaying progress. Iranian officials have continued to signal that they will not yield. The situation intensified after an American helicopter was shot down, prompting US “self-defense” strikes and subsequent Iranian retaliation against US military facilities in Bahrain, Jordan, and Kuwait.

The crisis also broadened after the Islamic Revolutionary Guard Corps announced the immediate closure of the Strait of Hormuz to all commercial and oil vessels. The warning raised concerns over disruptions to a critical energy shipping lane and added another layer of support for the greenback as investors sought safety.

On the economic front, May US consumer inflation came in as expected, with headline CPI rising 4.2% year over year, up from 3.8% in April. Core CPI also firmed to 2.9% from 2.8%. Attention now turns to the release of May Producer Price Index data and weekly Initial Jobless Claims later in the day, which may offer further clues on the inflation and labor outlook.

In Switzerland, lawmakers are weighing changes that could ease proposed capital requirements for UBS. If adopted, the move could reduce the burden imposed by the government’s draft plan and ease pressure on the bank. Such a shift would likely weigh on the Swiss Franc in the short- to medium-term, as lower capital demands could affect capital flows and alter safe-haven demand for the currency. Under the original proposal, UBS would have been required to fully back its foreign subsidiaries with 100% Common Equity Tier 1 capital, a move that could have forced the bank to raise about $20 billion.