Swiss Franc reaches fresh 16-month lows ahead of CPI data

The Swiss Franc (CHF) has reached its lowest level in 16 months, trading at a fresh low of 0.8367 against the US Dollar (USD) on Thursday. This decline in the Swiss Franc is due to a sharp weakening in investor sentiment in September. Market participants are eagerly awaiting the release of the Swiss Consumer Price Index (CPI) data later in the day.

The Swiss ZEW Survey, which gauges expectations, fell to 2.6, its lowest level in three months, down from 12.1 previously. Despite this drop, analysts maintain a positive view of the Swiss economy's underlying conditions, although concerns over inflation have intensified. On September 24, 2026, the Swiss National Bank (SNB) decided to maintain its policy rate at 0%, noting only a slight increase in medium-term inflationary pressure since June.

The central bank remains committed to maintaining price stability while supporting economic development and is prepared to intervene in the foreign exchange market as needed. However, the upside momentum for the USD/CHF cross may be limited as the US Dollar faces easing Federal Reserve rate hike expectations following softer-than-expected inflation data.

Market focus is now shifting to the US Nonfarm Payrolls report, expected to show a gain of 90,000 jobs in September and a steady unemployment rate of 4.1%. The latest shift in Fed expectations stems from August's US PCE price index data, which rose 0.3% month-over-month, falling short of the 0.4% forecast. Core PCE increased 0.2%, missing the 0.3% consensus estimate, and annual headline PCE inflation decelerated to 3.4%, significantly below the projected 3.7%.

Societe Generale's Jan Groen highlights that while August's US inflation appeared benign at first glance, the underlying picture was more troubling as core PCE undershot expectations, but the details were less reassuring. Groen warns that the disinflation trend remains uneven, posing a challenge for the Fed's efforts to return inflation to target sustainably.