Swiss Franc trades near 16-month lows as US Dollar surges on hawkish Fed expectations

Swiss Franc trades near 16-month lows as US Dollar surges on hawkish Fed expectations

- USD/CHF rises as strong US data and high oil prices fuel hawkish Fed signals, pushing October rate hike odds to 67.5%.

- The Swiss National Bank held rates at 0% in September, citing Middle East uncertainty and high oil prices.

- Swiss National Bank weighed potential foreign-exchange market interventions.

USD/CHF extends its gains for the third consecutive day, trading around nearly 16-month highs of 0.8296 during Asian hours on Friday. The currency pair appreciates as the US Dollar (USD) strengthens, driven primarily by hawkish signals from Federal Reserve officials.

Elevated oil prices and robust US economic data have stoked inflation concerns, reinforcing market expectations that the Fed may tighten its monetary policy even further. Reflecting this shift, the CME FedWatch Tool indicates that the likelihood of an October benchmark rate hike has jumped to nearly 67.5%, marking a significant increase from 55.4% a week prior and just 11% a month ago.

The Swiss Franc (CHF) has weakened following the Swiss National Bank’s (SNB) latest monetary policy decision. In contrast to other central banks, th...