USD/CHF trims gains on Wednesday as remarks from Federal Reserve (Fed) Chair Kevin Warsh weigh modestly on the US Dollar (USD).
However, expectations for a Fed rate hike and a lack of clarity surrounding US-Iran negotiations keep the Greenback’s downside contained
At the time of writing, the pair is trading around 0.8086, retreating from an intraday high of 0.8117. Speaking at the ECB Forum in Sintra on Wednesday, Fed Chair Kevin Warsh said, “We’re not going to give forward guidance,” adding, “We’ll chart a new course so we can make better decisions.” Wrash also noted that “inflation risks have come down.” The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading around 101.27, just below the more than one-year high of 101.80 touched last week. The United States and Iran reached a 60-day Memorandum of Understanding (MoU) last month, but progress toward a final peace agreement remains slow.
Although US and Iranian envoys have arrived in Doha, Qatar, no direct talks between the two sides are currently scheduled. On the monetary policy front, traders expect that the Fed could raise interest rates as soon as September, with markets pricing in a 67% probability of a rate hike, according to the CME FedWatch Tool. Rate hike expectations gained traction after the economic fallout from the US-Iran war pushed US Consumer Price Index (CPI) inflation to 4.2% in May, more than double the Fed’s 2% target.