USD/CHF holds gains near 0.8150, hovers near multi-year lows due to safe-haven demand
- USD/CHF remains close to the 0.8099 mark—its lowest level since September 2011.
- The US Dollar remains under pressure as investor uncertainty lingers amid the unpredictable trajectory of US trade and economic policy.
- The Swiss Franc has appreciated due to safe-haven demand amid heightened global trade tensions.
The USD/CHF pair is attempting to recover from recent losses registered in the previous session, trading around 0.8160 during Thursday’s Asian hours. However, it remains close to the 0.8099 mark—its lowest level since September 2011, touched on April 11.
The US Dollar (USD) continues to face headwinds as investor uncertainty persists due to the unpredictable nature of US trade and economic policy. In contrast, the Swiss Franc (CHF) is bolstered by safe-haven inflows, further pressuring the USD/CHF pair.
Tensions have escalated after US President Donald Trump launched an investigation into potential tariffs on key minerals, expanding the trade dispute with China. The probe includes critical sectors such as copper, pharmaceuticals, lumber, and semiconductors, underscoring concerns over the US's limited domestic production in these industries.
Despite broader Dollar weakness, the US Dollar Index (DXY) is slightly firmer, trading near 99.60, supported by robust consumer spending data. US Retail Sales jumped 1.4% in March, beating both February’s 0.2% rise and market expectations of a 1.3% increase, data showed on Wednesday. Traders now turn their focus to upcoming US data releases, including Building Permits, Housing Starts, the Philly Fed Manufacturing Index, and weekly Initial Jobless Claims.
Since the tariff announcement on April 2, the Swiss Franc (CHF) has appreciated more than 7%, emerging as one of the strongest major currencies. Investors are increasingly turning to the Franc as a safe-haven asset amid heightened global trade tensions and erratic policy signals from the US.
Meanwhile, the sharp appreciation of the CHF has fueled deflationary pressures in Switzerland, prompting speculation that the Swiss National Bank (SNB) might revisit the idea of reintroducing negative interest rates. Although the SNB has a history of intervening to curb Franc strength, it is now treading more carefully to avoid attracting criticism from Washington.
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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