• USD/CHF climbs to a one-week high as traders position ahead of the Fed and SNB interest rate decisions.
• Markets are firmly pricing an 87% chance of a 25 bps Fed rate cut on Wednesday.
• SNB is seen holding rates at 0.00% on Thursday, with policymakers signalling a high bar for any return to negative rates.

The Swiss Franc (CHF) trades on the back foot against the US Dollar (USD) on Monday as markets reposition ahead of this week’s key monetary policy decisions from the Federal Reserve (Fed) and the Swiss National Bank (SNB).

At the time of writing, USD/CHF is trading around 0.8072, its highest level since November 26, as the Greenback stages a modest rebound. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading around 99.10, after dipping to 98.79 earlier in the Asian session.

The Franc is struggling to find support even as markets remain firmly positioned for a Fed rate cut on Wednesday. According to the CME FedWatch Tool, traders assign an 87% probability of a 25 bps move, which would bring the Federal Funds Rate down to the 3.50%–3.75% range.

With the December rate cut almost fully priced in, investors will closely watch Fed Chair Jerome Powell’s press conference and the updated economic projections, which are expected to set the tone for the monetary policy path into 2026.

However, the latest PCE inflation figures and mixed labour indicators suggest the Fed may take a more cautious approach to further easing heading into 2026. US data released on Friday showed that disinflation is losing momentum, with Core PCE rising 0.2% MoM in September and easing only slightly to 2.8% YoY. Headline PCE held steady at 0.3% MoM and 2.8% YoY.

Labour signals were uneven as well. ADP Employment Change fell by 32,000 in November, missing expectations, while Challenger Job Cuts dropped sharply to 71.3K. Initial Jobless Claims also came in lower at 191K, highlighting resilience despite broader signs of cooling.

On the Swiss side, the focus is on the SNB’s interest rate decision scheduled for Thursday, where policymakers are expected to leave rates unchanged at 0.00%. Inflation has eased toward the lower end of the SNB’s 0–2% target range, but despite the unexpected slowdown, policymakers have indicated that returning to negative rates remains a high bar.

The central bank also expects inflation to edge slightly higher in the coming quarters, supporting the case for maintaining its current stance.

Recent reports suggest economists do not anticipate a move back into negative territory in 2026 either. According to the latest BHH Market View report, the swaps market assigns less than a 50% chance of a 25 bps cut to -0.25% over the next twelve months.