Rising oil prices and Middle East tensions fuel bets on tighter Fed policy, lifting the dollar to multi-week highs.
The Swiss Franc slumped to its lowest level against the US Dollar since June 2025, trading near 0.8170 as escalating Middle East conflict drove oil prices higher. The US Dollar Index climbed to 101.45, its strongest in three weeks, amid fears of prolonged supply disruptions in key shipping routes.
Market expectations for Federal Reserve rate hikes surged, with the CME FedWatch Tool showing an 83% probability of a September increase. A 35% chance of a hike at next week’s meeting also emerged. US jobless claims dropped to 187K last week, undershooting forecasts of 212K and reinforcing economic resilience.
Traders priced in higher inflation risks as attacks on oil tankers in the Red Sea threatened further supply constraints. US President Donald Trump warned of potential military action against Iran and Yemen’s Ansar Allah group, adding to geopolitical uncertainty.