Swiss Franc Bleeds Amid Rising Bets for Fed Hike

The Swiss Franc (CHF) remains under pressure despite an unexpected boost to economic expectations in Switzerland. The ZEW Economic Expectations Index jumped to 10 in July, its best reading since November last year.

This improvement is not enough to offset the impact of monetary policy divergence between the Swiss National Bank (SNB) and the Federal Reserve (Fed). The SNB's decision not to raise interest rates from the current 0% level has contributed to the CHF's decline, while markets are pricing a Fed rate hike in September.

The Federal Open Market Committee (FOMC) meeting later this week may provide further insight into the Fed's intentions. While Chairman Warsh may hint at interest rate hikes due to high inflationary risks, some strategists believe that a rate hike is not imminent, despite market expectations shifting towards a 25bp hike in September.