USD/CHF is moving up on Monday, breaking a two-day losing streak as the US Dollar (USD) reaches a new high for the year. This rise in the Greenback is driven partly by a significant drop in the Euro (EUR). Even so, there’s a noticeable pullback in expectations regarding a Federal Reserve (Fed) interest rate hike in October, following US employment data that was softer than anticipated. Right now, USD/CHF is trading around 0.8316, which is below last week’s high of 0.8382—the highest it’s been since May 2025.
The Euro is facing substantial selling pressure as worries over France’s public finances and its political deadlock filter through European markets. Currently, EUR/USD is at around 1.1189, having dipped to 1.1161 earlier today, marking its lowest point in over a year. Meanwhile, the US Dollar Index (DXY), which measures the value of the Greenback against a mix of six major currencies, hovers around 102.32 after reaching 102.53 recently.
New business activity data released on Monday indicates that the US economy is still holding strong. The final S&P Global Services Purchasing Managers’ Index (PMI) was adjusted slightly upwards to 58.8 for September, up from a preliminary reading of 58.7. Conversely, the ISM Services PMI decreased to 54.9 from 55.4, which is just below the market’s expectations of 55. However, both indices remain well above the 50 mark that distinguishes growth from contraction.
This release follows last week’s disappointing US Nonfarm Payrolls (NFP) report. According to the CME FedWatch Tool, traders are now estimating just a 20% chance for a rate increase at the Fed’s meeting on October 27-28, down from nearly 70% a week earlier.
Nevertheless, ongoing inflation concerns keep the door open for potential rate hikes later this year, as policymakers are focused on guiding inflation back toward the central bank’s 2% target. Oil price fluctuations also complicate the Fed’s efforts to achieve that target consistently. As for US Treasury yields, they remain elevated, close to multi-year highs, which provides extra support to the Greenback. The benchmark 10-year yield is near 5.30%, just shy of last week’s peak of 5.34%, a level not seen since 2002.
However, the surge in US Treasury yields isn’t just a consequence of the Fed’s outlook. It also stems from growing investor unease regarding the national debt and broader fiscal conditions, which could potentially limit further gains for the Greenback.
Concerns about fiscal health in both the United States and Europe are enhancing the Swiss Franc’s (CHF) attractiveness as a safe haven. This is especially true given Switzerland’s stronger fiscal position and relatively lower debt levels. Still, the significant interest-rate gap between Switzerland and other major economies, along with the Swiss National Bank’s (SNB) willingness to intervene in currency markets, presents ongoing challenges for the Franc.
