Swiss Franc Hits 9-Year High Against Dollar as Greenback Weakens
The Swiss franc reached its strongest level against the dollar in nearly nine years on Friday, while the euro also climbed to a four-month high. The dollar has been under pressure due to slowing U.S. inflation and expectations of interest rate cuts by the Federal Reserve in 2024.
The dollar index, which tracks the U.S. unit against a basket of currencies, has dropped 4.3 percent in the past three months, marking its largest quarterly decline this year.
The euro and the Australian dollar have benefited from the dollar’s weakness. The euro rose 0.12 percent to $1.1024, its highest level since mid-August. Meanwhile, the Australian dollar edged up to $0.6807, its highest point since late July.
The Swiss franc also strengthened against the dollar, falling as much as 0.3 percent to 0.85355 francs. This is the weakest level for the dollar against the Swiss franc since January 2015 when the Swiss National Bank discontinued its minimum exchange rate policy against the euro.
Investors are eagerly awaiting the release of the U.S. core personal consumption expenditures (PCE) print, which is the Federal Reserve’s preferred measure of underlying inflation. Expectations are for a 3.3 percent increase on an annual basis, slightly lower than October’s 3.5 percent rise.
“The distribution for U.S. inflation is now considered skewed and one-sided, with a high probability of lower levels,” said Chris Weston, head of research at Pepperstone. This gives the Federal Reserve more room to ease policy if necessary.
In other news, sterling gained 0.37 percent to $1.27375 following data that showed British retail sales in November exceeded expectations. However, third-quarter GDP was revised lower.
Meanwhile, in Asia, the yen remained relatively unchanged at 141.93 per dollar. Japan’s core consumer prices rose 2.5 percent in November, the slowest pace of increase in over a year. This eases pressure on the Bank of Japan (BOJ) to phase out its massive stimulus.
Overall, the Swiss franc’s surge against the dollar reflects the greenback’s weakening trend. The market is closely monitoring U.S. inflation data, which will provide further insights into the Federal Reserve’s monetary policy decisions.
By Rae Wee and Alun John
