The Swiss franc strengthened sharply on Friday, pushing USD/CHF down roughly 0.46% to around 0.7800 and extending its second consecutive weekly decline, as a weaker US dollar and tumbling oil prices followed Iran’s partial reopening of the Strait of Hormuz.
Strait of Hormuz reopened under conditions
Iranian foreign minister Araghchi said the Strait of Hormuz is “completely open” to commercial vessels, provided they follow routes coordinated by Iran’s Ports and Maritime Organisation.
The reopening is tied to a 10‑day ceasefire between Israel and Lebanon, brokered by the United States and in effect since April 16, 2026. The move eases immediate fears of a major disruption at one of the world’s key energy and trade chokepoints.
US president Donald Trump confirmed the reopening on social media but stressed that the US naval blockade of Iranian ports remains in place until a broader agreement with Tehran is reached. This means general commercial traffic can transit the strait, while direct maritime trade with Iran is still constrained.
Oil prices plunge as supply fears recede
Energy markets reacted swiftly. West Texas Intermediate crude futures fell more than 10%, briefly trading below $84 per barrel and touching near five‑week lows.
The sharp drop signals that markets are scaling back expectations of a severe or prolonged oil supply shock now that traffic through the strait is resuming.
Dollar index hits multi‑week low, yields fall
The sell‑off in oil fed directly into currency and bond markets. The US Dollar Index (DXY) slid to 97.63, its lowest level since February 27, before recovering slightly to trade around 97.9–98.0. The index remains on track for a third straight weekly decline as traders reassess geopolitical risk and monetary policy paths.
Lower energy prices helped ease near‑term inflation concerns and pushed US Treasury yields lower across the curve. The 10‑year note yield fell toward 4.25%, reflecting increased expectations that the Federal Reserve could turn more dovish if disinflation persists.
Fed expectations shift toward possible rate cut
According to the CME FedWatch Tool, traders are now pricing in roughly a 50% chance of a 25‑basis‑point rate cut by the end of the year, up from around 30% a day earlier and from a roughly 70% implied probability of no change previously.
San Francisco Fed president Mary Daly signaled that current rates could remain on hold if inflation reaccelerates, but she noted that faster de‑escalation in the Middle East could bring forward the timing of any adjustment. The latest move in oil and the dollar appears to reinforce that scenario.
Diplomatic talks underpin cautious risk tone
A second round of peace talks between Washington and Tehran is scheduled for the weekend, with diplomatic sources saying discussions will center on Iran’s nuclear commitments and potential sanctions relief.
President Trump has expressed optimism that “most points” of a deal are already agreed and suggested an accord could be reached within days, though key differences remain. The ongoing negotiations have steadied overall risk sentiment but continue to inject uncertainty into short‑term volatility across currencies and commodities.
Swiss franc strength reflects broader dollar weakness
The franc’s rise to near 0.7785 against the dollar mirrors broad-based US currency weakness rather than franc‑specific factors. As traders move to price in lower geopolitical risk, weaker oil, and a softer Fed path, demand has rotated away from the greenback, lifting the Swiss franc and other major peers.
With the Hormuz corridor partially normalized and talks set to resume, markets are likely to remain focused on the durability of the ceasefire, the status of the US naval blockade, and any signals from the Fed that confirm or challenge the newly dovish rate narrative.
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