Swiss Franc steadies as stronger inflation offsets broad US Dollar demand

USD/CHF trades flat on Thursday as stronger Swiss inflation offers some support to the Swiss Franc, while a firm US Dollar (USD) keeps the pair near levels last seen in May 2025. At the time of writing, USD/CHF trades around 0.8354 after reaching an intraday high of 0.8382.

The US Dollar climbs to a fresh year-to-date high, supported by elevated US Treasury yields as traders assess the Federal Reserve’s (Fed) monetary policy path following the latest US economic data. At the same time, concerns about the US fiscal and debt outlook keep the bond market under pressure.

The US Dollar Index, which tracks the Greenback’s value against a basket of six major currencies, trades around 101.75 after touching a fresh yearly high of 101.99 earlier in the day. Meanwhile, the benchmark 10-year US Treasury yield holds around 5.32% after reaching 5.34%, its highest level since 2002.

Fresh labour-market data released on Thursday showed that Initial Jobless Claims fell to 197K in the week ending September 26, below expectations of 200K and the previous reading of 198K. The four-week moving average also declined to 200K from 202.5K.

The figures follow Wednesday’s ADP report, which showed that private-sector employment increased by 90K in September, beating the 70K forecast and accelerating from 36K in August. Second-quarter US Gross Domestic Product was also revised higher to an annualized rate of 2.2% from 1.5%.

The latest data points to continued resilience in the US economy and suggests that the Fed has room to raise interest rates again in the coming months. However, markets have scaled back expectations that the central bank will move this month following softer-than-expected US Personal Consumption Expenditures inflation data released on Wednesday.

Core PCE inflation rose 0.2% MoM in August, below the 0.3% forecast, while the annual rate remained unchanged at 3.0%, undershooting expectations of 3.3%. The CME FedWatch Tool shows that traders now see about a 36% chance that the US central bank will raise interest rates at its October 27-28 meeting, down from 70% earlier this week.

Still, policymakers remain concerned that inflation is running above the Fed’s 2% target, while high energy prices add to upside risks as US-Iran negotiations remain deadlocked.

Kansas City Fed President Jeff Schmid said on Thursday, “Officials have work to do on inflation,” adding, “Energy prices are one of the biggest challenges for monetary policy today.” Boston Fed President Susan Collins said, “Economic growth is near trend, if not more than that; labor market near full employment, but inflation is too high.”

On the Swiss side, annual inflation accelerated to 1.0% in September from 0.8% in August, matching market expectations. Consumer prices were unchanged on a monthly basis after rising 0.4% previously. The figures offer some support to the Swiss Franc but are unlikely to force an immediate policy change, as inflation remains within the Swiss National Bank’s 0%-2% price-stability range. The SNB kept its policy rate unchanged at 0% at its September meeting.