Home · Business · Sep 8 archive
Swiss Franc Steadies as Fed Hike Expectations Offset Safe-Haven Flows
Confirmed
In Short: The Swiss Franc has steadied as rising US inflation expectations and safe-haven flows balance against the Swiss National Bank's policy stance.
The CME FedWatch tool indicates a 60.6% chance of another quarter-point Federal Reserve rate hike, while the Swiss National Bank is expected to keep its policy rate at 0% for the foreseeable future.
Analysts at Brown Brothers Harriman note that despite recent Swiss inflation surprises, the SNB's policy outlook remains benign, with the swaps curve pricing in a first hike in June 2027.
The Swiss Franc saw modest gains, supported by a strong US non-farm payrolls report, which revived expectations of a potential Fed rate hike in September, though safe-haven flows also played a role in its stability.
What's confirmed
What's still developing
- Traders will take more cues from the upcoming US Producer Price Index (PPI) and Consumer Price Index (CPI) inflation data, which could shape expectations for the Fed’s next policy move.
- If the reports show hotter-than-expected outcomes, this could lift the US Dollar (USD) against the Swiss Franc (CHF).
- Rising tensions in the Middle East could boost a safe-haven currency such as the CHF in the near term.
- They highlight that “the swaps curve continues to fully price in a first 25bps hike to 0.25% in June 2027,” underscoring market confidence that the SNB can stay on hold for an extended period.
- In their view, “the SNB has plenty of room to keep rates at 0.00% for some time, given that inflation remains well within the bank’s price stability mandate of less than 2% per annum,” a backdrop that helps cap how far the Franc can benefit from the latest data surprise.
- The dollar-Swiss franc saw strong rallies stall out with the benchmark pair registering modest gains of over 0.30% as the greenback was boosted by a solid US non-farm payrolls report, pushing the pair above the 50-day Simple Moving Average (SMA) to reach a daily high of 0.8126.
- Safe-haven assets like gold initially dipped below $4,400 before trying to recover.