- USD/CHF climbs to its highest level since June 2025, extending its advance for a sixth consecutive day.
- The Swiss Franc slips after Bloomberg reports the SNB may maintain zero interest rates through 2027.
- Markets await the Federal Reserve’s interest rate decision on Wednesday.
USD/CHF climbs to fresh highs since June 2025 on Monday after Bloomberg reported that the Swiss National Bank (SNB) could keep its policy rate at zero until the end of 2027. The SNB later declined to comment on the report, according to Reuters. At the time of writing, the pair trades around 0.8187, extending its gains for a sixth consecutive day.
Swiss inflation remains subdued and comfortably within the SNB’s 0%-2% price-stability range. Elevated Oil prices since the US-Iran war began have increased near-term inflation risks, but the impact has been far more contained in Switzerland than in the United States.
The Bloomberg report noted that the outlook is based mainly on current inflation forecasts and assumes no major new shocks, citing people familiar with the thinking inside the central bank.
Diverging monetary policy expectations keep USD/CHF tilted to the upside in the near term. While the SNB is expected to keep rates at zero, traders increasingly expect the Federal Reserve (Fed) to raise interest rates later this year to curb inflation.
The Fed announces its monetary policy decision on Wednesday and is widely expected to leave interest rates unchanged at 3.50%-3.75%. However, traders still price in a 33% chance of an immediate hike, while the probability of a rate increase in September stands near 81%, according to the CME FedWatch Tool.
The wide interest-rate gap between the two countries favours the US Dollar (USD). Meanwhile, the Greenback has also emerged as the preferred safe-haven currency during the US-Iran war, while the SNB’s readiness to curb excessive strength in the Swiss Franc limits demand for the currency.
A temporary pause in attacks between the United States and Iran initially weighed on the US Dollar earlier in the day. However, the optimism faded as the prospects of a peace agreement appear slim.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.47, recovering from an intraday low of 101.12.
