Dollar Surge Sends USD/CHF Higher as Hot PPI Data Fuels Fed Bets
Swiss Franc Falters as Inflation Shock Boosts U.S. Yields
The USD/CHF extended gains on Thursday after U.S. Producer Price Index (PPI) data came in hotter than expected, reinforcing expectations that the Federal Reserve will keep interest rates elevated for longer. The pair traded up 0.4% at 0.8950, marking its strongest level in over a week.
The July PPI rose 0.3% month-on-month and 2.6% year-on-year, both above consensus estimates. Core PPI, which excludes volatile food and energy prices, also surprised to the upside, rising 0.4% from June.
The data pushed U.S. Treasury yields higher, with the 10-year yield climbing to 4.27%, while the dollar index (DXY) advanced to 103.85. Traders now see a reduced likelihood of a Fed rate cut in September, with odds slipping below 40% from over 50% earlier in the week.
In Switzerland, economic data remains subdued, with inflation holding well below the Swiss National Bank’s 2% target. This divergence in monetary policy expectations is adding downward pressure on the franc.
Technical analysts note that USD/CHF has broken above its 200-day moving average, opening the door to a potential test of the 0.9000 resistance level in the near term.