Swiss Franc Weakens, Dollar Strengthens Ahead of US PPI
The Swiss franc weakened again against the US dollar during Thursday's trading (August 13). The USD/CHF pair rose for the fourth consecutive day, reaching around 0.8045—a two-week high—as the US dollar regained support driven by rising inflation risks.
Sentiment toward the dollar strengthened after the market's initial reaction to US CPI data began to fade. Although July inflation remained relatively contained, persistently high oil prices mean investors have not fully ruled out the risk of renewed upward pressure on prices.
Tensions in the Middle East remain a key factor. President Donald Trump reiterated that the US has full control over the Strait of Hormuz, while Iran insisted the waterway would remain closed until its demands are met. Houthi attacks on vessels in the Red Sea and Bab el-Mandeb have also kept a risk premium on oil prices.
These conditions keep the market pricing in the possibility that the Federal Reserve will maintain a hawkish stance. According to FedWatch, investors see an almost 80% chance that the Fed will raise interest rates at least once before the end of the year. These expectations helped the dollar rebound after its post-CPI dip.
Market focus now shifts to US Producer Price Index (PPI) data and weekly jobless claims. Higher producer inflation data could reignite rate-hike expectations and strengthen the dollar, whereas weaker data could put downward pressure on USD/CHF.
Newsmaker Analysis: USD/CHF momentum remains bullish as the dollar draws support from energy-related inflation risks and expectations of a tight Fed policy. As long as oil prices remain high and the PPI shows no significant weakness, the Swiss franc is likely to remain under pressure. Conversely, a cooler PPI reading could trigger profit-taking on the dollar and allow the franc room to recover. (asd)
Source: Newsmaker.id
