Swiss Franc Sinks to 16-Month Lows as US Dollar Strengthens on Higher Yields
The Swiss Franc (CHF) has hit fresh 16-month lows against the US Dollar (USD), as Swiss inflation data aligned with market expectations and supported the Swiss National Bank's dovish stance. The USD/CHF pair reached a high above 0.8380, marking the end of a six-week rally.
The Consumer Price Index (CPI) rose to a 1% year-over-year pace in September, from 0.8% in August, while monthly CPI eased to 0%. Retail Sales accelerated to a 3.2% Y-o-Y pace in August, outpacing market expectations of a moderate slowdown to 2.2%, but the negative impact of soft inflation data still outweighed this positive figure.
The US Dollar remains buoyed by higher US Treasury yields, with long-term yields reaching 24-year highs. This, combined with uncertainty in the Middle East conflict and its effect on energy prices, has kept demand for the USD strong. Jan Groen from Societe Generale notes that while recent inflation revisions were 'modestly favorable', underlying inflation remains too high to provide clear comfort for the Federal Reserve.