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USD/CHF
Source: Newsmaker.id
The Swiss franc weakened against the US dollar during Monday's trading (Sept. 14) as investors braced for a potential Federal Reserve interest rate hike this week. The USD/CHF pair rose for the seventh consecutive day, touching a session high of 0.8195.
This rise brought USD/CHF close to the 15-month peak of 0.8207 reached in late July. The US dollar's strength was primarily driven by expectations that the Fed would raise interest rates by 25 basis points at its meeting on Wednesday.
US Consumer Price Index data released last Friday reinforced the view that inflationary pressure remains well above the Fed's 2% target. Futures markets now price in a nearly 90% probability of a rate hike this week, along with a greater than 70% chance of a further increase before the end of the year.
These expectations widen the policy divergence between the Fed and the Swiss National Bank (SNB). The SNB is expected to maintain its benchmark interest rate at 0% until at least mid-2027, meaning the interest rate differential could continue to weigh on the Swiss franc.
Additional pressure stems from oil prices remaining above US$100 per barrel. Brent crude traded just below US$105 amidst the deteriorating situation in the Middle East. The Strait of Hormuz is reportedly on the verge of closure following a series of attacks on commercial vessels, while Houthi advances in the Red Sea have heightened the risk of disruptions at the Bab el-Mandeb Strait.
On the domestic front, Switzerland released data showing the Producer and Import Prices Index rose 0.7% in August—surpassing the 0.1% expectation and reversing the 0.1% contraction seen in July. On an annual basis, producer prices remained down 0.7%, a smaller decline than the 2.1% drop recorded the previous month.
Newsmaker Analysis: The strengthening of USD/CHF indicates the US dollar remains dominant as the market grows increasingly confident that the Fed will raise interest rates again. The Swiss franc is struggling to garner strong support as the SNB is expected to keep interest rates at 0%. Meanwhile, high oil prices place an additional burden on the Swiss economy, given the country's status as an energy importer. If the Fed adopts a truly hawkish stance on Wednesday, the USD/CHF pair could retest the 0.8207 level. However, should the Fed signal caution, the dollar's appreciation could begin to stall. (arl)
Source: Newsmaker.id