• Swiss ZEW investor expectations dropped to 2.6 in September, reflecting growing concerns over domestic inflation trends.
• The SNB maintained its policy rate at 0% and reaffirmed its readiness to intervene in forex markets.
• USD gains remain capped as cooling U.S. PCE inflation reduced expectations for an October Fed rate hike.

USD/CHF continues its winning streak for the seventh consecutive trading day, reaching its fresh 16-month high of 0.8367 during Asian hours on Thursday. The currency pair appreciated as the Swiss Franc (CHF) lost ground due to sharply weakening investor sentiment in September. Traders await Swiss Consumer Price Index (CPI) data release due later in the day.

Swiss ZEW Survey – Expectations fell to 2.6, its lowest level in three months, down from 12.1 previously. Despite the drop, the survey noted that analysts continue to view the underlying condition of the Swiss economy positively, though concerns over inflation have heightened.

Meanwhile, in its third quarterly monetary policy assessment on September 24, 2026, the Swiss National Bank (SNB) decided to keep its policy rate unchanged at 0%. The SNB noted that medium-term inflationary pressure had increased only slightly since June and that its current stance remains appropriate to maintain price stability while supporting economic development. The central bank also reaffirmed its readiness to intervene in the foreign exchange market as necessary to maintain appropriate monetary conditions.

However, upside momentum for the USD/CHF cross could remain limited as the U.S. Dollar (USD) struggles against easing Federal Reserve rate hike expectations following softer-than-expected inflation data released on Wednesday. The CME FedWatch Tool shows that markets now price in roughly a 38% chance of a Fed rate hike in October, down from nearly 51% prior to the PCE release. Market focus now turns to Friday’s U.S. Nonfarm Payrolls report, where consensus forecasts expect 90,000 jobs added in September and the unemployment rate to hold steady at 4.1%.

The shift in Fed expectations was driven by August U.S. PCE price index data, which rose 0.3% month-over-month against a 0.4% forecast, while core PCE increased 0.2%, missing the 0.3% consensus estimate. On an annual basis, headline PCE inflation decelerated to 3.4%, coming in significantly below the projected 3.7%.

US inflation details keep pressure on Fed despite softer core PCE headline

Societe Generale’s Jan Groen notes that while August US inflation appeared benign at first glance, the underlying picture was more troubling. He points out that “Core PCE undershot expectations, but the details were less reassuring,” as “softer core goods inflation masked a reacceleration in core services and super-core inflation, pointing to still-firm underlying price pressures.” In Groen’s view, the combination of a weaker headline and renewed strength in services underscores that the disinflation trend remains uneven and continues to pose a challenge for the Fed’s efforts to return inflation sustainably to target.