• USD/CHF remains under pressure as worries grow over the potential economic impact of US tariffs.
  • The CME FedWatch Tool suggested the first Fed rate cut to come in July.
  • The Swiss Franc gained strength after Switzerland reported better-than-expected Trade Balance figures.

USD/CHF slipped slightly during Friday’s Asian trading hours, hovering around 0.8180, after posting gains in the previous session. The pair is under pressure as the US Dollar weakens amid mounting concerns over the economic fallout from US tariffs. Market activity remains muted due to the Good Friday holiday.

Federal Reserve Chair Jerome Powell cautioned that persistent inflation coupled with a slowing economy could jeopardize the Fed’s dual mandate, raising the specter of stagflation. Sentiment was further dented after President Trump criticized Powell’s recent comments. Despite this, the CME FedWatch Tool shows markets are now pricing in around 86 basis points of rate cuts by the end of 2025, with the first expected in July.

Meanwhile, the Swiss Franc (CHF) strengthened on Thursday following upbeat Trade Balance data from Switzerland. The trade surplus widened to CHF 6.35 billion in March from CHF 4.80 billion in February—the largest since October 2024—driven by a 12.6% surge in exports versus a 10.4% rise in imports.

The CHF gained against the USD, hovering near its strongest level since 2011, as escalating US-China trade tensions fuel recession fears and bolster demand for the safe-haven Swiss currency. However, US President Donald Trump stated on Thursday that China had made multiple overtures and added, "I don't want to go higher on China tariffs. If China tariffs go higher, people won't buy." Trump expressed optimism that a trade agreement with China could be reached within three to four weeks.

(This story was corrected on April 18 at 06:50 GMT to say, in the second paragraph, that sentiment was further dented after President Trump criticized Powell’s recent comments, not former President Trump.)

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.

Source: Fxstreet