USD/CHF steadies despite rising Swiss yields on safe-haven demand
- USD/CHF may weaken as the Swiss Franc strengthens on rising domestic yields amid safe-haven demand.
- The SNB is expected to hold rates at 0%, with inflation on target and negative rates unlikely.
- The US Dollar holds ground as Fed caution increases after stronger-than-expected jobs data.
USD/CHF remains steady after two days of gains, trading around 0.7710 during the Asian hours on Thursday. However, the pair may weaken as the Swiss Franc (CHF) could receive support as Switzerland’s 10-year government bond yield climbed to 0.32%, its highest level since December, amid sustained safe-haven demand. Rising yields enhance the appeal of Swiss assets for foreign investors, boosting capital inflows and lending support to the currency.
The Swiss National Bank (SNB) is widely expected to keep its policy rate at 0% in the near term, as inflation is projected to remain on target over the next two years and the bar for reintroducing negative rates remains high.
Ongoing concerns around artificial intelligence and reports that Chinese regulators have urged financial institutions to limit exposure to US Treasuries due to policy uncertainty added to the cautious market tone.
Investors are closely monitoring macroeconomic releases for clues on the interest rate outlook. Switzerland’s January inflation figures, scheduled for February 13, are expected to show annual inflation holding at a muted 0.1%.
The USD/CHF pair maintains its position as the US Dollar (USD) receives support amid rising likelihood of Federal Reserve (Fed) caution on policy outlook following stronger-than-expected US jobs data released on Wednesday.
The CME FedWatch tool suggests that financial markets are now pricing in nearly a 94% probability that the Fed will leave rates unchanged at its next meeting, up from 80% the previous day. The US Consumer Price Index (CPI) inflation report will be the highlight later on Friday.
US Nonfarm Payrolls rose by 130,000 in January, following a revised 48,000 increase in December (previously 50,000), beating market forecasts of 70,000. Meanwhile, the Unemployment Rate edged lower to 4.3% from 4.4%.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | -0.01% | -0.24% | 0.09% | 0.12% | 0.03% | 0.02% | |
| EUR | -0.09% | -0.10% | -0.33% | -0.01% | 0.03% | -0.04% | -0.07% | |
| GBP | 0.01% | 0.10% | -0.23% | 0.09% | 0.13% | 0.05% | 0.03% | |
| JPY | 0.24% | 0.33% | 0.23% | 0.29% | 0.34% | 0.22% | 0.24% | |
| CAD | -0.09% | 0.00% | -0.09% | -0.29% | 0.05% | -0.06% | -0.07% | |
| AUD | -0.12% | -0.03% | -0.13% | -0.34% | -0.05% | -0.09% | -0.10% | |
| NZD | -0.03% | 0.04% | -0.05% | -0.22% | 0.06% | 0.09% | -0.01% | |
| CHF | -0.02% | 0.07% | -0.03% | -0.24% | 0.07% | 0.10% | 0.01% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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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