Swiss ZEW investor expectations fell to 2.6 in September, indicating increasing apprehensions regarding domestic inflation trends. The SNB has kept its policy rate at 0% and reiterated its willingness to engage in foreign exchange markets as necessary. The gains of the USD appear constrained as the recent moderation in U.S. PCE inflation has diminished anticipations for a rate hike by the Federal Reserve in October. USD/CHF maintains its upward trajectory for the seventh consecutive trading day, achieving a new 16-month peak of 0.8367 during the Asian trading session on Thursday. The currency pair appreciated as the Swiss Franc weakened significantly, driven by a notable decline in investor sentiment during September. Traders are anticipating the release of the Swiss Consumer Price Index data later today.
Swiss ZEW Survey – Expectations declined to 2.6, marking its lowest point in three months, a decrease from the previous figure of 12.1. Despite the decline, the survey indicated that analysts maintain a favourable outlook on the fundamental state of the Swiss economy, although apprehensions regarding inflation have intensified. Meanwhile, in its third quarterly monetary policy assessment on September 24, 2026, the Swiss National Bank opted to maintain its policy rate at 0%. The SNB observed a modest increase in medium-term inflationary pressure since June, asserting that its current policy stance is suitable for sustaining price stability while fostering economic growth. The central bank reaffirmed its readiness to intervene in the foreign exchange market as necessary to maintain appropriate monetary conditions.
However, upside momentum for the USD/CHF cross could remain limited as the U.S. Dollar struggles against easing Federal Reserve rate hike expectations following softer-than-expected inflation data released on Wednesday. The CME FedWatch Tool indicates that markets currently assign approximately a 38% probability to a Fed rate hike in October, a decrease from nearly 51% before the PCE release. Attention is now directed toward the upcoming U.S. Nonfarm Payrolls report scheduled for Friday. Consensus forecasts anticipate an addition of 90,000 jobs in September, with the unemployment rate expected to remain unchanged at 4.1%. The shift in Fed expectations was influenced by the August U.S. PCE price index data, which increased by 0.3% month-over-month, falling short of the 0.4% forecast. Meanwhile, core PCE rose by 0.2%, also missing the consensus estimate of 0.3%. Annual headline PCE inflation slowed to 3.4%, well below the expected 3.7%.
Societe Generale’s Jan Groen notes that while August US inflation appeared benign at first glance, the underlying picture was more troubling. He points out that “Core PCE undershot expectations, but the details were less reassuring,” as “softer core goods inflation masked a reacceleration in core services and super-core inflation, pointing to still-firm underlying price pressures.” In Groen’s view, the combination of a weaker headline and renewed strength in services underscores that the disinflation trend remains uneven and continues to pose a challenge for the Fed’s efforts to return inflation sustainably to target.
