US Dollar Surges on Rate Hike Bets as Swiss Franc Loses Ground
The US Dollar (USD) has strengthened against the Swiss Franc (CHF), reaching around 0.8110 on Monday during Asian hours, as investors bet on an imminent Federal Reserve interest rate hike following strong employment data.
According to the US Bureau of Labor Statistics, August Nonfarm Payrolls rose by 162,000, surpassing the expected 56,000, while the unemployment rate remained steady at 4.1%. Annual wage growth slowed less than anticipated to 3.1%.
The CME FedWatch tool now indicates a 58.3% probability of a 25-basis-point Fed rate increase in September, with the Greenback receiving support from rising crude oil prices and fears of rekindled inflationary pressures following a geopolitical escalation between the US and Iran over the weekend.
Meanwhile, the Swiss Franc has lost its appeal as a funding currency for carry trades due to growing inflation concerns, driven by surprisingly robust economic indicators. Swiss inflation doubled in August, while quarterly economic growth accelerated to its highest level in nearly five years.