Swiss Franc slips as US Dollar holds near yearly high after mixed PMI data

The Swiss Franc slipped as the US Dollar maintained its near-year-high position following mixed Purchasing Managers' Index (PMI) data. The USD strengthened against the Euro, while traders revised down expectations of another Federal Reserve interest-rate hike in October following weaker-than-anticipated US employment figures. At the time of writing, USD/CHF was trading at around 0.8316, slightly below last week's peak of 0.8382, which was the highest level since May 2025.

The Euro experienced significant selling pressure due to concerns over France's public finances and political gridlock, with EUR/USD trading at around 1.1189, its lowest level in over a year. The US Dollar Index (DXY) held near 102.32, having reached 102.53 earlier. Fresh business activity data on Monday revealed that the US economy remains robust, with the final S&P Global Services PMI rising slightly to 58.8 in September from the preliminary reading of 58.7.

The ISM Services PMI was at 54.9, slightly below the market's forecast of 55. However, both surveys remained above the 50 mark, indicating expansion. The Federal Reserve's focus on inflation and employment remained the primary drivers of the USD's strength, as traders now priced in only a 20% chance of a rate hike during the October 27-28 meeting, down from nearly 70% a week ago.

Nevertheless, persistent inflation concerns and the need to bring inflation closer to the central bank's 2% target kept expectations of a rate hike later in the year alive. Higher US Treasury yields, reflecting concerns over the country's debt burden and fiscal position, also supported the Greenback. Despite these factors, the Swiss Franc's appeal as a safe-haven currency, bolstered by Switzerland's stronger fiscal position and lower debt burden, kept it relatively stable.

However, the wide interest-rate gap between Switzerland and other major economies, coupled with the Swiss National Bank's willingness to intervene in the currency market, posed a challenge for the Franc.