Swiss Franc weakens against the US Dollar as oil prices hit $84.50, reviving Fed rate hike concerns ahead of key data.
The USD/CHF pair climbed to near 0.8116 in early European trading, reflecting a rebound in the US Dollar as oil prices surged to a two-week high of $84.50. The Dollar Index (DXY) recovered to 99.65 after hitting a two-month low of 99.29, driven by fears that rising energy costs could reignite inflationary pressures and prompt a hawkish Federal Reserve response.
Recent US economic data, including softer inflation and labor reports, had led traders to reduce expectations for a September rate hike. HSBC Asset Management noted that market pricing for a Fed move has fallen to its lowest since mid-June, citing benign CPI and weaker employment figures as key factors. Analysts suggest that if upcoming August data remains subdued, the Fed may hold rates steady next month.
The focus now shifts to upcoming US inflation and employment reports, which will shape near-term Fed policy expectations and currency movements.