Dollar Heads for Weekly Drop as Fed Easing Bets Build; Swiss Franc Holds Firm

The dollar index slipped back from a recent six month high and was modestly higher on the day, but still down around half a percent for the week. With U.S. markets closed for Thanksgiving and liquidity thin, even small flows had an outsized impact on intraday moves.

Strategists noted that political pressure in Washington for lower interest rates is reinforcing market expectations of additional cuts over the coming quarters. However, views on the medium term dollar outlook remain split, with some highlighting narrower growth gaps between the United States and Europe and others pointing to the resilience of the U.S. economy.

Euro and Swiss franc: peace talks and safe haven flows

The euro eased 0.13 percent to 1.1581 dollars after touching a one and a half week high at 1.1613 earlier in the session, as traders watched developments around potential Ukraine peace talks. Any credible progress on a deal would likely support the single currency by reducing geopolitical risk premia in Europe.

For the Swiss franc, the focus remains on its role as a classic safe haven. The dollar briefly fell to a one week low at 0.8028 francs before stabilising around 0.8060, leaving USD/CHF close to the stronger end of its recent range for the franc. An eventual peace agreement in Ukraine could, in theory, take some pressure off CHF, but analysts stress there is little sign of a clear “peace dividend” yet given persistent uncertainty.

Against the euro, the franc is still relatively strong, with EUR/CHF trading not far from recent lows for the year, which means one euro continues to buy fewer francs than in previous periods of calmer geopolitics. For cross-border workers and savers paid in Swiss francs, this backdrop keeps the franc’s purchasing power high when converting into euros.