Dollar Rally Fades as Fed Hike Bets Recede

The US Dollar (USD) has lost momentum and failed to push past its previous highs against the Swiss Franc (CHF), despite expectations of a potential Federal Reserve interest rate hike in September.

Market bets on a Fed hike have receded significantly, with futures markets now pricing a mere 30% chance of a 25 basis point increase next month, down from 67% just two weeks ago.

The Swiss Franc remains under pressure due to the wide interest rate gap between the Federal Reserve and the Swiss National Bank (SNB), which is fueling carry trades.

Analysts at OCBC expect the SNB to keep policy rates at zero for the rest of the year, reinforcing the outlook for continued CHF softness.