USD/CHF treads water above 0.7700 ahead of Swiss Trade Balance data
- USD/CHF struggles as the Swiss Franc gains on safe-haven demand amid geopolitical tensions.
- Swiss Franc may further gain on expectations of continued SNB accommodative stance as January inflation held at 0.1%.
- US Dollar steadies after recent gains, supported by hawkish FOMC Meeting Minutes.
USD/CHF remains in the negative territory after paring daily losses, trading near 0.7720 during the Asian hours on Thursday. The pair struggles as the Swiss Franc (CHF) draws safe-haven support amid persistent tensions between the United States and Iran, alongside stalled Ukraine-Russia talks. Traders are also awaiting Switzerland’s Trade Balance and Industrial Production data later in the day.
The Swiss Franc could receive more support from expectations that the Swiss National Bank (SNB) will maintain an accommodative stance in the near term. Swiss inflation remained slightly positive at 0.1% in January, at the lower bound of the SNB’s 0–2% target range and in line with its Q1 projections. This reinforced market views that rates will likely stay unchanged at the SNB’s March meeting and possibly throughout 2026.
SNB President Martin Schlegel recently said the central bank can tolerate short periods of negative inflation while focusing on medium-term price stability, noting that the bar for returning to negative rates remains high.
However, the USD/CHF pair could find renewed support as the US Dollar (USD) steadies after gaining more than 0.5% in the previous session, boosted by hawkish minutes from the Federal Open Market Committee (FOMC). The January FOMC Meeting Minutes revived speculation about possible rate hikes if inflation persists. While nearly all policymakers backed holding rates steady, only a few favored a cut, and officials signaled openness to easing if inflation cools as expected.
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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