USD/CHF Trades Steady Amid Mixed Economic Signals
On Thursday, USD/CHF remained stable as stronger inflation figures from Switzerland lent some support to the Swiss Franc, while a robust US Dollar kept the pair close to levels last seen in May 2025. Currently, USD/CHF hovers around 0.8354 after peaking at 0.8382 earlier in the day.
The US Dollar reached a new high for the year, thanks to rising US Treasury yields, as traders analyze the Federal Reserve’s (Fed) monetary policy direction following recent economic data. Concurrently, persistent concerns about the US fiscal situation and debt outlook continue to put pressure on the bond market.
The US Dollar Index, which measures the Greenback’s strength against a basket of six major currencies, is around 101.75 after briefly hitting a yearly high of 101.99. Meanwhile, the benchmark 10-year US Treasury yield is around 5.32%, having touched 5.34%, its highest since 2002.
New data on the labor market showed that Initial Jobless Claims decreased to 197K for the week ending September 26, which is lower than the 200K forecast and the previous week’s figure of 198K. The four-week moving average also fell to 200K from 202.5K.
These numbers follow Wednesday’s ADP report indicating private-sector employment grew by 90K in September, surpassing expectations of 70K and a sharp rise from August’s 36K. Additionally, the second-quarter US Gross Domestic Product was revised upward to an annualized rate of 2.2%, up from 1.5%.
This latest data points to a resilient US economy, suggesting that the Fed might have room to raise interest rates again soon. However, market expectations for a rate hike this month have diminished following the release of weaker-than-expected US Personal Consumption Expenditures inflation data.
Core PCE inflation increased by 0.2% month-on-month in August, which is less than the anticipated 0.3%. The annual rate has remained stable at 3%, missing projections of 3.3%. The CME FedWatch Tool indicates that traders now see about a 36% chance of a rate hike at the Fed’s upcoming meeting on October 27-28, a significant drop from 70% earlier in the week.
Still, policymakers are worried about inflation staying above the Fed’s 2% target, especially with high energy prices adding further risks, all while US-Iran negotiations remain stalled.
Kansas City Fed President Jeff Schmid noted, “Officials have work to do on inflation,” while mentioning that “Energy prices are one of the biggest challenges for monetary policy today.” Boston Fed President Susan Collins commented, “Economic growth is near trend, if not more than that; labor market near full employment, but inflation is too high.”
Turning to Switzerland, annual inflation rose to 1% in September, up from 0.8% in August, aligning with market expectations. Monthly consumer prices remained unchanged after a previous increase of 0.4%. While these figures provide some support to the Swiss Franc, an immediate policy shift seems unlikely as inflation stays within the Swiss National Bank’s target range of 0%-2%. The SNB decided to maintain its policy rate at 0% during its September meeting.
