USD/CHF soars to 0.9630 as dollar jumps on US inflation numbers

• US dollar jumps across the board after August US CPI numbers.
• Swiss franc prints fresh highs versus the euro and pound.
• USD/CHF rebounds at the 200-day SMA, having 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 climbed from 0.9477 to 0.9632. It is hovering around 0.9600/10, having the best day in weeks.

US inflation explains it all

The US dollar dropped during the previous days amid expectations of a decline in the August CPI, but the numbers showed a different story. The CPI rose 0.1% in August and reinforced expectations of an aggressive Federal Reserve boosting the dollar and triggering a Treasury sell-off.

The US 10-year yield jumped to 3.47%, reaching the highest level since June and the 2-year yield rose to 3.74%, a fresh cycle high. The DXY rebounded from weekly lows under 108.00 to 109.55; it is up by more than 1%.

Despite the sharp slide versus the dollar, the Swiss franc rose against the euro and the pound amid risk aversion. The EUR/CHF trades at 0.9610, the lowest since late August, while GBP/CHF is at historic lows at 1.1070.

More US inflation numbers are due on Wednesday. Next week is the FOMC meeting. A 75 basis points rate hike is already priced in. “In our view, the August CPI report supports a continued aggressive effort by the Fed to restrict its inflation-adjusted policy stance”, explained analysts at TD Securities. They forecast a 75 bps rate hike next week and also in November.

Technical levels