The Swiss Franc continues to weaken against the US Dollar on Tuesday, as the currency pair marks its fifth consecutive day of gains, driven by widespread strength in the Greenback. The pair is presently trading around 0.8085, having momentarily reached the 0.8100 psychological level, marking its peak since August 22. The USD/CHF pair has experienced an upward trend for five straight days, reaching its highest level since late August. The US Dollar exhibits widespread strength as the Federal Reserve’s assertive position reduces expectations for a rate cut in December. The remarks from SNB’s Tschudin and Schlegel reflect a cautious stance, emphasizing that the existing policy rates are appropriate at this juncture.
The US Dollar continues to strengthen, supported by the Federal Reserve’s assertive position following last week’s 25-basis-point interest rate cut. Fed Chair Jerome Powell highlighted that additional easing this year is “not a foregone conclusion,” prompting markets to recalibrate their expectations for a December rate cut. Nonetheless, the varying opinions among Fed officials have created uncertainty regarding the monetary policy outlook. Governor Lisa Cook expressed her perspective on the current policy rate, describing it as “modestly restrictive,” which she deems appropriate as long as inflation remains above the 2% target. San Francisco Fed President Mary Daly emphasized that officials should “remain open-minded” about a possible decision in December. Chicago Fed President Austan Goolsbee voiced apprehension regarding the inflation data, whereas Governor Stephen Miran highlighted that policy has “passively tightened despite Fed cuts.”
The Greenback is strengthening due to a decrease in global risk sentiment, as major equity markets faced a decline on Tuesday. Interest in AI-related stocks has diminished following mixed corporate earnings and fresh warnings about a potential market correction stemming from inflated valuations. The US Dollar Index, which assesses the Greenback’s value relative to a basket of six major currencies, has increased above 100.00, reaching its highest point since early August, with a daily rise of nearly 0.20%.
On the Swiss side, the Franc encountered heightened pressure after the release of inflation data that fell short of expectations on Monday. This development ignited speculation regarding the possibility that the Swiss National Bank could consider reverting to negative interest rates to tackle persistent disinflationary pressures. Nonetheless, comments from SNB officials offered limited support for the currency. Petra Tschudin remarked that the central bank’s interest rates are “where they should be” and highlighted that negative rates would only be adopted when deemed necessary. She also indicated that FX interventions are still on the table and that the inflation forecast is “where we want it.” In the interim, SNB President Martin Schlegel indicated that inflation is expected to experience a modest increase in the upcoming quarters, although US tariffs are suppressing global growth.