Dollar Gains on Rate Hike Odds, Weakening Swiss Franc
The US Dollar Index has strengthened as markets price in an 87% probability of a quarter-point rate hike following strong inflation data. The Swiss Franc, meanwhile, is struggling due to the potential for a widening interest rate gap with the United States.
According to the CME FedWatch tool, financial markets have priced in nearly an 87% probability of a quarter-point rate hike at the Federal Reserve's September meeting, up from 59% a week ago. This increase has led to aggressive Federal Reserve rate-hike bets for Wednesday's decision.
The Swiss National Bank (SNB) is widely expected to leave its key policy rate unchanged at 0%, maintaining the lowest rate among major economies. However, this unchanged rate may not be enough to counter the potential interest rate gap with the United States.