USD Surges Against CHF as Fed Decision Looms

The US Dollar (USD) has continued its winning streak against the Swiss Franc (CHF), rising for an eighth consecutive day. The pair trades around 0.8204, near its highest level in over a year.

The strong performance of the USD is largely attributed to hawkish expectations surrounding the Federal Reserve's interest-rate decision, scheduled for later today at 18:00 GMT. Despite market expectations of no change within the 3.50%-3.75% range, there is also a possibility of a surprise hike amid heightened energy-driven inflation risks.

Commerzbank analysts argue that while inflation has picked up in Switzerland in recent months, its impact on the exchange rate effect is smaller than assumed, keeping price pressures contained. As a result, they maintain their forecast that the Swiss National Bank will leave interest rates unchanged until the end of 2027.

The ongoing conflict in the Middle East and tensions between the US and Iran have also contributed to the USD's rise, with oil prices rebounding sharply after Iran launched missiles at a US military base. The war has dimmed hopes for normal shipping through the Strait of Hormuz anytime soon, further supporting demand for the USD.