Swiss Franc Strengthens Amid Rising Inflation and Pressure on the US Dollar!

The Swiss franc strengthened against the US dollar during Asian trading on Thursday (November 5, 2026), with the USD/CHF pair declining for the second consecutive day and hovering around the 0.8140 level. The Swiss currency’s gains were driven by a weakening US dollar following the Democratic Party's victory in the US midterm elections. Furthermore, mounting inflationary pressure in Switzerland has fueled expectations that the Swiss National Bank (SNB) might consider a tighter interest rate policy.

The US dollar’s ​​weakness follows the Democratic Party’s success in securing control of both chambers of Congress, raising concerns that the economic agenda of President Donald Trump’s administration could face obstacles. This shift in the composition of Congress may constrain fiscal policy, including planned increases in government spending. Meanwhile, growing hopes for a resolution to the conflict in the Middle East have led to a sharp drop in global oil prices. This has helped alleviate global inflation concerns while placing additional downward pressure on the US dollar.

Nevertheless, the dollar’s ​​decline remains tempered by US economic data indicating a resilient labor market. An ADP report showed an increase of 86,000 private-sector jobs in October, surpassing the forecast of 69,000. Meanwhile, the ISM Services PMI index dipped slightly to 54.5 from 54.9, yet it remains above the 50-point threshold, signaling continued expansion. These figures reinforce the view that the Federal Reserve (the Fed) retains justification for maintaining a restrictive monetary policy. According to the CME FedWatch Tool, the probability of an interest rate hike in December is estimated at nearly 82%.

From Switzerland, inflation data for October showed a larger-than-expected increase, reaching 1.5% on an annual basis. This increase raises doubts about the Swiss National Bank’s (SNB) ability to maintain its current monetary policy—without raising interest rates—through 2027. Mounting inflationary pressures could prompt the central bank to consider tightening measures to ensure price stability. Such expectations provide support for the Swiss franc, as the prospect of higher interest rates enhances the appeal of CHF-denominated financial assets. Meanwhile, investors are awaiting the U.S. weekly jobless claims report on Thursday and the Non-Farm Payrolls (NFP) data on Friday to gauge the likely future direction of monetary policy.