- The USD/CHF remains under pressure as concerns about the possible economic impact of US tariffs grow.
- The Fedwatch of the CME tool suggests that Fed’s first rate cut could arrive in July.
- The Swiss Franco gained strength after Switzerland reported better trade balance figures than expected.
The USD/CHF fell slightly during Friday’s Asian negotiation hours, around 0.8180, after registering profits in the previous session. The torque is under pressure as the US dollar weakens in the midst of growing concerns about the economic repercussions of US tariffs. Market activity remains moderate due to Good Friday holiday.
The president of the Federal Reserve, Jerome Powell, warned that persistent inflation together with an economy in deceleration could endanger the dual mandate of the Fed, raising the spectrum of the stanflation. The feeling was even more affected after former President Trump criticized Powell’s recent comments. Despite this, the CME Fedwatch tool shows that the markets are now valuing around 86 basic points of rates cuts by the end of 2025, with the first expected in July.
Meanwhile, the Swiss Franco (CHF) was strengthened on Thursday after the optimistic data of the Swiss trade balance. The commercial surplus was extended to 6,350 million CHF in March from 4.8 billion CHF in February, the largest since October 2024, driven by a 12.6% increase in exports compared to a 10.4% increase in imports.
The CHF won in front of the USD, around its strongest level since 2011, since the increase in commercial tensions between the US and China feeds the fears of recession and reinforces the demand of the Swiss currency as a safe refuge. However, US President Donald Trump declared Thursday that China had made multiple approaches and added: “I don’t want to increase tariffs to China. If tariffs to China increase, people will not buy.” Trump expressed optimism that a commercial agreement with China could be reached within three to four weeks.
Franco Swiss faqs
The Swiss Franco (CHF) is the official currency of Switzerland. It is among the ten most negotiated coins worldwide, reaching volumes that far exceed the size of the Swiss economy. Its value is determined by the general feeling of the market, the country’s economic health or the measures taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franco was linked to the euro (EUR). The link was eliminated abruptly, which resulted in an increase of more than 20% in the value of the Franco, which caused a turbulence in the markets. Although the link is no longer in force, the fate of the Swiss Franco tends to be highly correlated with that of the euro due to the high dependence of the Swiss economy of neighboring Eurozone.
The Swiss Franco (CHF) is considered a safe shelter asset, or a currency that investors tend to buy in times in markets. This is due to the perception of Switzerland in the world: a stable economy, a strong export sector, great reserves of the Central Bank or a long -standing political position towards neutrality in global conflicts make the country’s currency a good option for investors fleeing risks. It is likely that turbulent times strengthen the value of the CHF compared to other currencies that are considered more risky to invest.
The Swiss National Bank (BNS) meets four times a year (once each quarter, less than other important central banks) to decide on monetary policy. The bank aspires to an annual inflation rate of less than 2%. When inflation exceeds the objective or it is expected that it will be overcome in the predictable future, the bank will try to control the growth of prices raising its type of reference. The highest interest rates are usually positive for the Swiss Franco (CHF), since they lead to greater returns, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the CHF.
Macroeconomic data published in Switzerland are fundamental to evaluate the state of the economy and can affect the assessment of the Swiss Franco (CHF). The Swiss economy is stable in general terms, but any sudden change in economic growth, inflation, current account or foreign exchange reserves have the potential to trigger movements in the CHF. In general, high economic growth, low unemployment and a high level of trust are good for Chf. On the contrary, if the economic data suggests to a weakening of the impulse, the CHF is likely to depreciate.
As a small and open economy, Switzerland depends largely on the health of the neighboring economies of the Eurozone. The European Union as a whole is the main economic partner of Switzerland and a key political ally, so the stability of macroeconomic and monetary policy in the Eurozone is essential for Switzerland and, therefore, for the Swiss Franco (CHF). With such dependence, some models suggest that the correlation between the fate of the euro (EUR) and the Swiss Franco is greater than 90%, or almost perfect.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
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