Euro rebounds against Swiss Franc as ECB minutes highlight cautious outlook

• The Euro edges higher against the Swiss Franc, snapping a three-day losing streak.
• The ECB's July meeting minutes emphasized exceptional uncertainty and a cautious, data-dependent approach.
• Swiss GDP growth slowed in Q2, with quarterly expansion at 0.1% and yearly growth easing to 1.2%.

The Euro (EUR) is edging higher against the Swiss Franc (CHF) on Thursday, snapping a three-day losing streak that dragged the pair to its lowest level since August 4 on Wednesday. At the time of writing, EUR/CHF is staging a sharp rebound, trading around 0.9356 at the start of the American session.

The rebound is unfolding against the backdrop of the European Central Bank's (ECB) July Monetary Policy Meeting Accounts, which underscored the Governing Council’s delicate balancing act. Members broadly agreed that current policy rates are in “neutral territory,” neither stimulating nor restraining activity, but the debate reflected the euro area’s fragile outlook. Some policymakers contended that recent fiscal expansion in parts of the bloc could have lifted the neutral rate, meaning that without further adjustment, policy might already lean slightly restrictive. Others emphasized the “exceptionally uncertain” environment, citing both upside and downside risks to growth and inflation.

While a minority favored a rate cut in July, arguing that inflation risks were tilting lower, most members saw a “high option value” in waiting for further data and clarity, particularly around global trade negotiations and their potential to shock prices in either direction. Importantly, the Accounts revealed a consensus that ECB communication should remain careful, neutral, and deliberately uninformative to avoid signaling premature commitments, while reaffirming the Council’s preference for a data-dependent, meeting-by-meeting approach.

Earlier in the day, Eurozone sentiment data came in on the softer side, adding to concerns about the bloc’s growth outlook. The Economic Sentiment Indicator slipped to 95.2 in August, down from 95.7 in July and below consensus expectations of 96.0. The Business Climate Index eased marginally to -0.72 from -0.71, while Consumer Confidence held steady at -15.5. Taken together, the figures suggest that firms and households remain cautious, highlighting weak domestic demand.

On the Swiss side, second-quarter growth data pointed to a slowdown in momentum. Gross Domestic Product (GDP) rose just 0.1% QoQ, in line with expectations but well below the 0.4% pace recorded in the previous quarter. On a yearly basis, the economy expanded 1.2% in Q2, easing from 1.8% in Q1 and missing forecasts of 1.4%. The softer readings highlight a cooling trend in Switzerland’s growth performance, reinforcing the view that the Swiss National Bank (SNB) may tread cautiously, while monitoring subdued inflation and the risks of excessive Franc strength.