Franc extends recovery from five-week trough

Swiss franc rose in European trade off five-week lows against dollar amid strong speculation for a 0.5% rate hike by the Swiss National Bank in March.

The dollar is dipping from recent highs on profit-taking amid thin trading due to the Presidents Day holiday in the US.

The dollar fell 0.4% against the franc today to 0.9220, with a session-high at 0.9262, after closing up 0.1% on Friday, the first profit in four days away from recent five-week lows at 0.9332. 

Swiss Rates

Current Swiss interest rates are stabilizing around 1%, the highest since 2008, with Swiss rates remaining the penultimate lowest rates rates worldwide. 

Swiss Inflation

Last week data showed consumer prices rose past estimates in January, showing that inflationary risks remain on the upside, with the central bank expected to extend its 0.5% rate hikes for a longer period of time.

Such data bolstered the case for a 0.5% Swiss rate hike in the March meeting. 

The Dollar

The dollar index fell 0.2% on Monday off six-week highs at 104.66 against a basket of major rivals.

Recent US data showed strong flexibility for the economy, boosting the case for multiple more Fed rate hikes to contain inflation, and in turn underpinning the dollar.