Swiss Franc Nears Yearly Lows as Fed Rate Hike Bets Boost US Dollar

The Swiss Franc (CHF) continued its downward trend against the US Dollar (USD) on Monday, extending its losing streak to seven consecutive days. The USD/CHF pair reached session highs at 0.8195, just below the 15-month peak of 0.8207 hit in late July.

The anticipation of a quarter-point interest rate hike by the Federal Reserve (Fed) later this week is driving the US Dollar higher, and oil prices consolidating above $100 are putting additional pressure on the Swiss economy.

The Producer and Import Prices Index (PPI) in Switzerland accelerated to 0.7% growth in August, beating expectations of a 0.1% uptick. However, this data does not alter the view of a steady SNB policy, and therefore, the impact on the CHF has been negligible.

The futures markets are pricing a nearly 90% chance of a Fed hike on Wednesday, and above 70% chances of at least another rate hike before the year-end, according to data by the CME's FedWatch Tool.