The USD/CHF pair extended its gains for the fourth consecutive session on Wednesday (October 28), trading around 0.8303—near a two-week high. The US dollar found support ahead of the Federal Reserve’s policy decision, while the Swiss franc faced pressure as investors gravitated toward higher-yielding currencies.
The Fed is expected to hold interest rates in the 3.75%–4% range, following a 25-basis-point hike in September. However, the market assigns an approximately 85% probability to a rate hike in December, making the policy statement and the press conference by Chair Kevin Warsh the primary focus.
Hawkish expectations have intensified, as rising energy prices—driven by conflict in the Middle East—threaten to keep US inflation elevated. Oil prices strengthened following reports of a potential US military operation against Iran after the US midterm elections, further bolstering the dollar.
The US Dollar Index (DXY) hovered around 102.40, nearing a two-week high. Strategists at Brown Brothers Harriman suggest that the FOMC decision is unlikely to rule out further tightening; key factors to watch include potential divisions among officials and Warsh’s stance on inflation.
Meanwhile, the Swiss National Bank’s (SNB) policy rate remains at 0%—significantly lower than US interest rates. This yield differential makes the Swiss franc less attractive as an income-generating asset, leading to its use as a funding currency in "carry trade" strategies.