- The USD/CHF is gaining ground while investors adopt a cautious posture before the decision on the interest rates of the Federal Reserve.
- All eyes are put in the comments of the president of the FED, Jerome Powell, particularly in the context of the growing tariff tensions.
- The Swiss Franco could be under pressure, with the markets completely discounting a rate cut of 25 basic points by the SNB in ​​June.
The USD/CHF stops its three -day loss streak, around 0.8250 during the European session on Wednesday while the US dollar (USD) wins traction. The dollar is strengthening as the markets adopt a cautious tone before the announcement of interest rates of the Federal Reserve, scheduled for later in the North American session.
The FED is expected to maintain its reference rate without changes in 4.25–4.50% per third consecutive meeting in May 2025, balancing inflation signals in deceleration with a resistant labor market and a growing uncertainty about the US commercial policy of the US Renewed political pressure from President Trump and urge to cuts of fees.
In a related development, the US Treasury Secretary, Scott Besent, and the trade representative, Jamieson Greer, will meet with the Vice Primer Chinese Minister, He Lifeng, in Geneva this weekend. This is the first high -level commitment since the US increased tariffs, feeding global commercial friction. The China Ministry of Commerce confirmed its assistance after reviewing Washington’s proposals, considering the feedback of the national industry and the broader global feeling.
Despite a firmer USD, the Swiss Franco (CHF) has also found support, backed by safe refuge flows while investors react to volatile signals of the US commercial and fiscal policy. would reduce the policy rate from 0.25% to 0%. Some analysts even suggest that a return to negative interest rates is possible.
In the Data Front, SNB currency reserves fell for the third consecutive month, descending to 702,895 million CHF in April 2025 – the lowest level since August 2024 – from 725,551 million CHF in March. Meanwhile, the Swiss unemployment rate fell to 2.8% not seasonally adjusted in April, the lowest level in four months, from 2.9% in the previous two months.
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.
