Swiss Franc sharpens decline to 2023 lows

Swiss Franc slid in European trade for the fifth straight session against dollar to 2023 lows, particularly two-month lows on concerns about a policy gap between Switzerland and the US.

Uncertainty surrounds the Swiss National Bank's policies following the expected 0.5% rate hike in March, while a batch of bullish US data paved the way for multiple more Fed rate hikes following March.

The dollar rose 0.3% against the franc to 0.9429, the highest since December 7, with a session-low at 0.9398.

The franc closed Friday 0.7% lower, the fourth loss in a row, and the longest such streak of losses since November, following upbeat US consumer spending data. 

The franc lost 1.8% last week against dollar, the largest weekly loss since August 2022.

Swiss Rates

Swiss interest rates are settled at 1%, the highest since 2008, but the second lowest worldwide. 

The latest Swiss inflation data bolstered the case for a 0.5% rate hike by the National Bank in March, the second such a hike in a row. 

Thus Swiss rates will reach 1.5%, compared to an expected 5% US rates following the March Fed meeting, widening the policy gap between both countries.

Fed Rates

Latest US data showed personal spending rose 0.6% in January, above estimates of a 0.4% rise.

Analysts believe recent US data is indicative the US is undergoing overheat in activities, raising pressure on the Fed to extend policy tightening in upcoming months.

Following Friday's data, odds for an at least 0.25% Fed rate hike in March were 100%, while odds for a 0.5% rate hike rose from 27% to 33%.

Futures traders now expect US rates to reach a peak of 5.5% in July and to remain above 5% throughout this year.