Dollar Gains Against Swiss Franc as CPI Data Approaches

Key Moments

Swiss Franc Weakens as Sentiment Sours

USD/CHF extended its upward trajectory for the seventh consecutive trading day, reaching a fresh 16-month high of 0.8367 during Asian hours on Thursday. The move reflected broad weakness in the Swiss Franc (CHF) as investor sentiment deteriorated sharply in September. Market participants are now turning their attention to the upcoming Swiss Consumer Price Index (CPI) release later in the day.

The latest Swiss ZEW Survey – Expectations declined to 2.6 in September, down from 12.1 previously and marking the lowest level in three months. While the survey indicated that analysts still regard the underlying condition of the Swiss economy as positive, it also highlighted mounting concern over inflation developments.

SNB Holds Policy Rate and Reaffirms FX Intervention Stance

In its third quarterly monetary policy assessment on September 24, 2026, the Swiss National Bank (SNB) left its policy rate unchanged at 0%. The central bank stated that medium-term inflationary pressures had increased only slightly since June and that its existing policy stance remains suitable for preserving price stability while supporting economic growth.

The SNB also reiterated its willingness to step into the foreign exchange market if needed in order to ensure appropriate monetary conditions. This reaffirmation underscores the central bank’s readiness to respond should currency market dynamics threaten its policy objectives.

Fed Expectations Ease After Softer PCE Data

Despite the recent strength in USD/CHF, further upside in the pair could be constrained. The U.S. Dollar (USD) has faced headwinds as investors scaled back expectations for an additional Federal Reserve rate hike in October, following weaker-than-anticipated inflation data released on Wednesday.

According to the CME FedWatch Tool, markets now assign roughly a 38% probability to a Federal Reserve rate increase in October, down from nearly 51% before the latest U.S. Personal Consumption Expenditures (PCE) data. Attention is now shifting to Friday’s U.S. Nonfarm Payrolls report, where consensus projections call for an increase of 90,000 jobs in September and an unchanged unemployment rate of 4.1%.

PCE Inflation Details Highlight Uneven Disinflation Path

The adjustment in Fed expectations followed the August U.S. PCE price index figures. Headline PCE rose 0.3% month-over-month, below the 0.4% forecast, while core PCE increased 0.2%, undershooting the 0.3% consensus. On a year-over-year basis, headline PCE inflation slowed to 3.4%, notably under the projected 3.7%.

Commentary on the report suggested that the benign headline numbers masked more complex underlying dynamics. 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.