The Swiss Franc (CHF) strengthened ahead of the Swiss National Bank (SNB) policy decision, with the USD/CHF pair losing ground and trading around 0.8240 during Asian hours on Thursday after modest gains the previous day [1]. Economists at DBS Group Research expect the SNB to keep its policy rate unchanged at 0% at the September 24 meeting, but anticipate an upgrade to the bank’s near-term inflation forecast due to elevated energy prices and ongoing uncertainty in the Middle East [1]. Despite improved Swiss growth and easing CHF haven pressures against the Euro and Pound, the SNB is seen as likely to adjust its inflation outlook rather than its policy rate at this meeting [1].
The US Dollar (USD) weakened, halting a three-day winning streak, even as the Federal Reserve (Fed) maintained a hawkish policy outlook. The latest Flash US S&P Global PMI data for September showed manufacturing expanding faster than expected at 52.0, which helped offset slight pullbacks in services and composite activity [1]. Following these US economic signals, market expectations for a 25-basis-point Fed rate hike in October surged to nearly 69.7%, up from 48.7% last week [1]. Several Fed officials reiterated support for the recent rate increase and warned of persistent inflation risks [1].
Technically, USD/CHF maintains a bullish near-term bias, trading above both the short-term and medium-term exponential moving averages (EMAs), with the nine- and 50-period EMAs below the market and a 14-day Relative Strength Index (RSI) near 63, indicating firm but not extreme positive momentum [1]. The FXS Fed Sentiment Index at around 148 supports a constructive macro backdrop for the dollar, though the elevated RSI suggests upside momentum could slow if overbought conditions develop [1]. Initial support for USD/CHF is seen at the 9-period EMA at 0.8213, with deeper support at the 50-period EMA near 0.8121 [1].
On the day, the Swiss Franc was the strongest against the Australian Dollar among major currencies [1].
CONCLUSION
The Swiss Franc gained strength ahead of the SNB policy decision, with markets expecting no change in rates but a possible inflation forecast upgrade. Meanwhile, the USD/CHF pair dipped as the US Dollar lost momentum despite rising Fed rate hike expectations. Market participants are closely watching both central bank moves and upcoming US economic data for further direction.