USD/CHF hits seven-month high above 0.8100 as Fed hike bets boost the dollar

USD/CHF climbed to a fresh seven-month high near 0.8107 during Wednesday's Asian session, extending gains for a sixth consecutive day as stronger US economic data and rising Federal Reserve rate-hike expectations continued to support the US dollar.

The latest boost came from June's preliminary US PMI figures. According to S&P Global, the US Composite PMI rose to 52.2 from 51.5 in May, signalling continued expansion in business activity. Manufacturing remained particularly strong, with the Manufacturing PMI increasing to 55.7, while the Services PMI improved to 51.3, both beating market expectations.

The stronger data reinforced expectations that the Fed may keep policy restrictive for longer. Markets are currently pricing an 86.1% probability of at least one Fed rate hike by December, up sharply from around 61% before last week's FOMC meeting, according to CME FedWatch data. The repricing has helped push the US dollar to its strongest level since May 2025.

Meanwhile, geopolitical developments provided additional support for the greenback. US officials said Iran had agreed to enhanced nuclear inspections following recent talks in Switzerland, while Iranian authorities denied making any new commitments. Although the mixed signals have kept some uncertainty in the market, easing concerns over a broader regional conflict have reduced demand for traditional safe-haven currencies, including the Swiss Franc.

On the Swiss side, the Swiss National Bank (SNB) kept its policy rate unchanged at 0% at its June meeting. However, the central bank raised its inflation forecasts and reiterated its willingness to intervene in currency markets if excessive Franc strength threatens price stability.

Despite the SNB's relatively firm stance, the widening interest-rate gap between the United States and Switzerland continues to favour USD/CHF. Investors are now awaiting the Swiss ZEW Expectations Survey and the SNB Quarterly Bulletin, both due later on Wednesday, for fresh clues on the outlook for the Swiss economy.

Key drivers

• USD/CHF reaches a seven-month high near 0.8107.
• US Composite PMI rises to 52.2, beating forecasts.
• Markets price an 86.1% chance of a Fed hike by December.
• SNB keeps rates unchanged at 0%.
• Swiss ZEW Survey and SNB Bulletin due later Wednesday.

Sources: S&P Global PMI, CME FedWatch, Swiss National Bank. For informational purposes only — not investment advice.