• USD/CHF depreciates as easing October Fed rate-hike bets weigh on the US Dollar.
• High US Treasury yields and persistent inflation concerns from elevated energy costs limit further Swiss Franc gains.
• Commerzbank analysts believe that the SNB will remain focused on inflation rather than immediate rate hikes.

USD/CHF extends its losses for the second consecutive day, trading around 0.8290 during Asian hours on Friday. The pair depreciates as the US Dollar (USD) struggles amid easing Federal Reserve (Fed) rate hike bets, with markets pricing in nearly a 28% chance of an October rate increase according to the CME FedWatch Tool.

However, the Greenback could regain its footing due to persistent inflation concerns from elevated energy costs and expectations of a Fed rate hike in December. Benchmark borrowing costs have seen dynamic moves, with 10- and 30-year US Treasury yields holding around 5.25% and 5.62%, respectively, after pulling back from multi-decade highs as fiscal and political instability in France sparked demand for safe-haven assets.

Despite that retreat, US Treasury yields remain near their highest levels since 2002. This positioning is supported by expectations of further Federal Reserve tightening, underlying resilience in the US economy, and mounting concerns over the nation’s long-term fiscal and debt trajectories.

Traders continue to monitor economic indicators for signals on monetary policy direction, with attention focused on upcoming Nonfarm Payrolls data. Economists project an addition of 90,000 jobs, a noticeable moderation from the previous month’s 162,000, while the Unemployment Rate is expected to hold steady at 4.1%.

Switzerland’s robust Q2 data prompts only cautious optimism at Commerzbank

Analysts at Commerzbank note that “Switzerland’s second-quarter growth figures have caused quite a stir in recent weeks,” with the surprisingly strong 1.9% quarter-on-quarter expansion drawing significant attention. However, they stress that the performance was driven largely by net exports, particularly to the Euro area excluding Germany, rather than a broad-based domestic upswing. Given the inherent volatility of net exports, Commerzbank remains cautious, lifting its 2026 growth forecast only modestly to “2%” and expecting the SNB to stay focused on inflation dynamics rather than respond with immediate rate hikes.

SNB seen prioritising inflation anchor over swift policy response

Analysts at Commerzbank argue that the latest upside surprise in Swiss growth does not, in itself, warrant an immediate policy shift from the SNB. In their view, “the SNB thus does not need to react directly to the renewed strength in growth figures by hiking rates; it can focus on anchoring inflationary pressures within the middle of the target range for the time being,” suggesting the central bank will remain more attentive to its inflation mandate than to short-term fluctuations in activity.