Markets now price a 63.4% chance of a September Fed rate increase after PCE inflation data exceeds expectations.
The USD/CHF pair advanced nearly 0.30% to 0.8100 in Asian trading Friday, driven by heightened expectations of a Federal Reserve rate hike. The CME FedWatch tool shows a 63.4% probability of a September 15–16 rate increase, up from prior levels.
Inflation pressures underpinned the shift, with the headline Personal Consumption Expenditures (PCE) Price Index rising to 4.1% year-over-year in May, the first breach of 4.0% in three years. Core PCE also climbed to 3.4%, its highest since October 2023, reinforcing hawkish bets.
Swiss economic sentiment deteriorated sharply in June, with the UBS & CFA Switzerland index falling to -25.0 from -11.1 in May. The Swiss National Bank held rates at 0% for a fourth straight meeting, citing stable growth and inflation conditions.