USD/CHF remains subdued near 0.7720 as Swiss Franc gains on safe-haven demand
- USD/CHF falls as the US Dollar weakens amid White House economic policy uncertainty.
- President Trump imposed new 10% tariffs despite a Supreme Court block on part of his duties.
- The Swiss Franc gains as expectations for near-term SNB rate cuts continue to fade.
USD/CHF extends its losing streak for the fifth consecutive day, trading around 0.7720 during the Asian hours on Thursday. The pair trades on the back foot as the Swiss Franc (CHF) benefits from safe-haven demand amid renewed trade tensions.
US President Donald Trump moved forward with fresh 10% tariffs on trading partners, despite the Supreme Court of the United States (US) blocking part of his proposed duties. In his State of the Union address, Trump said the US economy is rebounding, defended tariffs as supportive of growth, and criticized the Court’s decision to strike down elements of his trade policy.
The Swiss Franc is supported by fading expectations of near-term rate cuts from the Swiss National Bank (SNB). Swiss inflation held steady at 0.1% in January, remaining at the lower end of the SNB’s 0–2% target range and broadly in line with its first-quarter outlook. Policymakers are widely expected to keep rates unchanged for now, as inflation is projected to gradually rise.
Meanwhile, the Swiss ZEW Expectations Index improved sharply to 9.8 in February from -4.7 in January, marking its second-highest level since January last year, reflecting growing expectations that the SNB will maintain its policy rate at 0% through 2026.
Looking ahead, markets will focus on Switzerland’s Q4 Employment data later in the day and Q4 GDP figures due Friday. In the US, Weekly Initial Jobless Claims are scheduled for release during the North American session.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
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