The Swiss Franc dropped to a fresh 16-month low against the US Dollar during Thursday's Asian trading session, weighed down by deteriorating domestic investor confidence and ahead of key inflation numbers. The currency pair USD/CHF extended its upward trajectory for the seventh consecutive trading session, climbing to an intraday peak of 0.8367. Traders in the foreign exchange market remained cautious, awaiting the release of Switzerland's Consumer Price Index (CPI) figures due later in the day to gauge the future path of monetary policy.
Swiss Investor Confidence Drops to Three-Month Low
Domestic sentiment in Switzerland showed notable deterioration as the Swiss ZEW Survey index measuring investor expectations slumped to 2.6 in September. This marked the lowest reading in three months, dropping steeply from the 12.1 recorded in the prior release. While market analysts participating in the survey maintained an overall constructive assessment of the Swiss economy's underlying health, apprehension surrounding inflationary pressures mounted significantly. The drop in sentiment reflected broad concerns about domestic pricing dynamics and reduced the appeal of the Swiss currency.
Swiss National Bank Keeps Policy Rate Anchored at Zero
Addressing monetary conditions, the Swiss National Bank (SNB) concluded its third quarterly monetary policy assessment on September 24, 2026, opting to keep its benchmark policy rate steady at 0%. Policymakers highlighted that medium-term price pressures had experienced only a minor uptick since their June evaluation. The central bank emphasized that its existing monetary policy stance continues to be appropriate for securing domestic price stability while fostering continuous economic progress. Furthermore, the SNB reiterated its commitment to step into the foreign exchange market with direct interventions if deemed necessary to maintain balanced monetary conditions.
US Inflation Revisions and Shifting Federal Reserve Expectations
While USD/CHF maintained its winning run, broader upside momentum for the greenback was kept in check as markets reassessed the Federal Reserve's rate path following cooling inflation figures released on Wednesday. Data from the CME FedWatch Tool revealed that traders now assign roughly a 38% probability to an interest rate hike at the October meeting, down substantially from nearly 51% prior to the release of the Personal Consumption Expenditures (PCE) report. Market attention has rapidly pivoted toward Friday's upcoming US Nonfarm Payrolls release, where consensus projections forecast the addition of 90,000 jobs in September and an unchanged unemployment rate of 4.1%.
Analyzing the underlying price metrics, Societe Generale analyst Jan Groen pointed out that while August US headline inflation appeared mild initially, the granular components pointed to deeper issues. Groen stated that core PCE missed consensus estimates, but the breakdown was less comforting because softer core goods prices overshadowed an acceleration across core services and super-core inflation, signaling that price pressures remain firmly embedded. In Groen's assessment, the divergence between softer headline numbers and renewed strength in services demonstrates that the disinflation trajectory remains uneven, continuing to present hurdles for the Fed's quest to guide inflation sustainably back to its target.
Reflecting these price dynamics, market participants pushed back expectations for the next Federal Reserve rate hike from October 28 to December 9. The inflation release driving this repricing carried substantial revisions regarding July rather than August. The government's annual benchmarking adjustment, published alongside the August PCE Price Index, revised down the July core reading excluding food and energy from 3.3% to 3.0%.
Movements Across Major Currencies, Gold, and Crypto
Across the broader currency sphere, the Australian Dollar struggled against the firm greenback, with AUD/USD consolidating near a two-month low around the mid-0.6900s during Asian hours on Thursday. Although the softer US PCE figures reduced expectations for an October Fed rate hike, inflation anxieties fueled by high oil prices kept US Treasury yields elevated. Simultaneously, Australia's trade surplus contracted sharply in August to AUD495M, offering negligible support to the currency pair.
Meanwhile, USD/JPY held near the top of its weekly trading range above 158.00 on Thursday morning. Despite cooling PCE figures, oil-driven inflation risks supported US yields near multi-year peaks. Geopolitical friction between the US and Iran bolstered demand for the safe-haven dollar, providing sustained momentum for the pair. Widespread dollar demand largely counteracted hawkish expectations surrounding the Bank of Japan (BoJ) as well as the risk of currency intervention from Japanese authorities.
In Europe, EUR/USD hovered at its weakest point since May 2025, although potential inflation surprises in the Eurozone could offer the common currency a measure of support. The pair traded down to 1.1312 on Wednesday, remaining well below its January high of 1.2082.
In the commodities space, spot gold saw dip-buying interest emerge around the $4,139 region during Asian trading, halting a retreat from the previous day's high near $4,220 that was prompted by softer US inflation readings. However, firm US bond yields and dollar strength continued to cap upside potential for the precious metal. In digital assets, Hyperliquid (HYPE) fell 2% on Thursday, paring a 5% advance from the previous session. Institutional demand cooled with $5 million in net outflows on Wednesday, dampening short-term investor enthusiasm as the token remained confined beneath the $90 threshold.
