Swiss Franc Surges as US Rate Hike Fading Fueled by Weak Retail Sales
The US Dollar (USD) weakened on Wednesday as expectations of a Federal Reserve interest rate hike next month faded. The USD/CHF pair depreciated to around 0.8120 during Asian hours, following modest gains in the previous day.
The decline was attributed to disappointing economic data, including a drop in US Retail Sales in July for the first time in nine months. This added to concerns stemming from unexpected job losses last month and tame CPI inflation figures.
Although the Fed left interest rates unchanged at its last meeting, three officials dissented in favor of a rate hike, leaving traders looking to the upcoming minutes for insight into the central bank's division. The CME FedWatch tool now prices in just 35% chance of a rate hike at the September meeting, down from 47% a month earlier.
In contrast, Switzerland's economic growth accelerated sharply to 1.5% quarter-on-quarter in the second quarter of 2026, driven by foreign exchange interventions and strong export sector performance. Inflationary pressures eased further, with Swiss inflation slowing to 0.4% in July, its lowest level in four months.