Swiss Franc Slumps to 16-Month Lows Amid Strong US Dollar

The Swiss Franc has extended its losses for the fifth consecutive day against a strong US Dollar. Despite this, the USD/CHF pair is trading at 0.8330, just below the 16-month high of 0.8339 hit earlier in the day. The CHF's decline comes despite the release of the KOF leading Indicator report, which showed an unexpected improvement in September to 109.1 - its strongest reading in six years.

The economic outlook remains favorable according to the report, with manufacturing, services, and construction sectors showing positive developments. However, foreign demand and financial and insurance services have weakened slightly. The US Dollar remains strong, buoyed by a mix of strong macroeconomic data and growing hopes that the US Federal Reserve will hike interest rates at least once more before year-end.

Fed Governor Lisa Cook has endorsed this view, stating that she expects 'continued inflation pressure in coming months' due to artificial intelligence and conflict in the Middle East. Market-derived rate expectations remain firmly tilted towards further tightening, with investors still positioned for over three hikes by the end of next year.