USDCHF Extends Winning Streak as Markets Expect Fed Rate Hike
The US Dollar has extended its winning streak to five sessions against the Swiss Franc (CHF), trading at around 0.8191 on Tuesday. This comes ahead of the Federal Reserve's policy decision on Wednesday, which is expected to bring a 25-basis-point rate hike.
Markets are almost fully pricing in this rate increase, which would mark the first since 2023. Additionally, higher oil prices due to the ongoing war in the Middle East have pushed US Treasury yields higher and added to inflation pressure.
The Swiss Franc remains under pressure, with Switzerland's low-inflation backdrop allowing the Swiss National Bank (SNB) to keep its policy rate at 0%. Analysts point out that a wide interest-rate differential supports the use of CHF as a funding currency, favoring the USD carry.