The USD/CHF pair advanced for a second consecutive session, hovering near 0.8110 during Monday’s Asian trading hours. The uptick reflects a broad recovery in the US Dollar, propelled by stronger-than-expected American employment figures that have reignited speculation over an imminent Federal Reserve rate hike.
Data from the US Bureau of Labor Statistics revealed that Nonfarm Payrolls surged by 162,000 in August, drastically outperforming the 56,000 consensus forecast. The unemployment rate held steady at 4.1%, while annual wage growth decelerated less than projected to 3.1%. In the wake of the release, markets swiftly adjusted monetary policy expectations; the CME FedWatch tool now indicates a 58.3% probability of a 25-basis-point rate increase in September.
The Greenback found additional support as surging crude oil prices revived inflation fears following a geopolitical escalation between the US and Iran over the weekend. Tensions flared after US forces targeted three Iranian tankers in retaliation for missile strikes on American warships, prompting Tehran to declare a new restricted zone around the Strait of Hormuz.
Conversely, the Swiss Franc lost its allure as a funding currency for carry trades amid mounting inflation concerns that have fostered a hawkish market sentiment. Swiss inflation doubled in August while quarterly economic growth accelerated to its highest pace in nearly five years. These robust indicators have amplified bets that the Swiss National Bank (SNB) may be compelled to raise borrowing costs sooner than previously anticipated.
Analysts at Brown Brothers Harriman noted the Swiss data delivered a distinct upside surprise, with headline CPI climbing to 0.8% year-on-year against a 0.5% consensus, up from 0.4% in July. This marks the highest level since September 2024 and exceeds the SNB’s Q3 forecast of 0.6%. BBH added that underlying price pressures firmed, with core CPI surprising at 0.4% year-on-year versus a 0.3% consensus, following four consecutive 0.3% readings, signaling a gradual but notable pickup in core inflation momentum.
Despite these hawkish signals, institutional forecasts remain cautious regarding the immediate policy trajectory. A recent Swiss Bankers Association survey showed all responding bankers expect the SNB to maintain its policy rate at 0% through year-end. Financial markets are currently pricing the first rate hike for June 2027, while the majority of economists project the central bank will defer its initial increase until early 2028.