USD/CHF is strengthening as expectations for a Fed rate hike continue to rise. The CME FedWatch tool indicates that markets are assigning a 63.4% likelihood to an interest rate hike in September. Swiss investor sentiment experienced a significant decline, dropping to -25.0 in June from -11.1 in May, and continues to reside firmly in negative territory. USD/CHF is showing an upward trend, having increased by nearly 0.30%, and is currently trading around 0.8100 during the Asian hours on Friday. The pair rises as the US Dollar finds support from growing expectations of a Federal Reserve rate hike. According to the CME FedWatch tool, markets have assigned a 63.4% probability to the Fed raising interest rates during its September 15–16 meeting.
This hawkish sentiment is driven by rising inflation data, as the headline Personal Consumption Expenditures Price Index increased to 4.1% year-over-year in May, up from 3.3% in April. This surge, marking the first instance the headline figure has exceeded 4.0% in three years, is primarily linked to escalating energy prices due to the Middle East conflict, maintaining the possibility of additional rate hikes this year firmly in consideration. Furthermore, the Fed’s preferred inflation gauge, the core PCE index, increased to 3.4% year-over-year, up from 3.3%. This indicates the peak annual core reading since October 2023. Swiss investor sentiment experienced a notable decline in June 2026, falling to -25.0 from -11.1 in May, and continuing to reflect a deeply negative outlook.
According to the latest UBS & CFA Society Switzerland survey, the economic expectations index saw a significant month-on-month decrease of 13.9 points. The Swiss National Bank has decided to maintain its benchmark policy rate at 0% for the fourth consecutive meeting, emphasising that its existing monetary policy is conducive to fostering economic growth and ensuring price stability. However, the central bank also raised its inflation forecasts and reminded markets that it is fully prepared to intervene in the foreign exchange markets if currency pressures necessitate such action.