- US dollar jumps across the board after US CPI figures for August.
- The Swiss franc marks new highs against the euro and the pound.
- USD/CHF bounces off the 200-day SMA, having the best day in weeks.
The USD/CHF rose sharply from the lowest level in four weeks to the highest since Friday, following the release of US inflation data. The pair rose from 0.9477 to 0.9632. It is hovering around 0.9600/10, having the best day in weeks.
US inflation explains everything
The US dollar fell over the previous few days amid expectations of a decline in August’s CPI, but the numbers told a different story. The CPI rose 0.1% in August, reinforcing expectations of a hawkish Federal Reserve, boosting the dollar and triggering a sell-off in Treasuries.
The 10-year US bond yield soared to 3.47%, hitting the highest level since June, and the 2-year yield rose to 3.74%, a new cycle high. DXY recovered from weekly lows below 108.00 to 109.55; has risen more than 1%.
Despite the sharp decline against the dollar, the Swiss franc rose against the euro and the pound amid risk aversion. EUR/CHF is trading at 0.9610, the lowest level since late August, while GBP/CHF is at record lows at 1.1070.
US inflation figures will be released on Wednesday. Next week is the FOMC meeting. A rate hike of 75 basis points is already planned. “In our view, the August CPI report supports a continued aggressive effort by the Fed to tighten its inflation-adjusted policy,” analysts at TD Securities explained. They foresee a rate hike of 75 basis points next week and also in November.
Technical levels
Source: Fx Street
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