The Swiss Franc (CHF) is trading lower against the US Dollar (USD) on Wednesday, as the dollar found some support after coming under sustained pressure earlier this week. At the time of writing, the USD/CHF pair is trading around 0.7940, snapping a three-day losing streak.
Aside from the modest rise in the US dollar, the move appears to be largely technical in nature, reflecting short covering and moderate profit taking following the pair’s recent decline.
However, broader market sentiment remains fragile amid ongoing trade tensions between the US and the European Union, after President Donald Trump recently threatened to impose tariffs as part of his push to control Greenland.
Some of these tensions eased after Trump said during his speech at the World Economic Forum in Davos that he would not use force to seize Greenland, leading to a modest improvement in risk appetite and easing safe-haven flows into the franc.
However, upside in USD/CHF may remain limited, as Trump’s protectionist trade agenda and interference in Federal Reserve independence continue to fuel “sell America” rhetoric, weighing on confidence in US assets.
Trump again criticized Federal Reserve Chairman Jerome Powell, saying he was “too late” on interest rates and accused him of raising interest rates and “preventing us from succeeding.” Trump also said he expects to announce a new Fed chair in the not-too-distant future.
All eyes are now on Washington, where the US Supreme Court is scheduled to hear arguments at 15:00 GMT in a case linked to President Trump’s efforts to fire Federal Reserve Governor Lisa Cook.
Meanwhile, Swiss National Bank President Martin Schlegel said at the World Economic Forum in Davos that Swiss inflation could turn negative in some months in 2026, but stressed that this would not pose a problem for the central bank, which remains focused on price stability in the medium term.
Looking ahead, traders are awaiting delayed Personal Consumption Expenditure (PCE) inflation data and third-quarter annual GDP figures due on Thursday.
Frequently asked questions about the Swiss franc
The Swiss Franc (CHF) is the official currency of Switzerland. It is among the top ten most traded currencies in the world, with its volume exceeding the size of the Swiss economy. Its value is determined by 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 suddenly removed, causing the value of the franc to rise by more than 20%, causing turmoil in the markets. Although the peg is no longer in effect, the fortunes of the Swiss franc tend to be highly correlated with the euro due to the high dependence of the Swiss economy on the neighboring eurozone.
The Swiss Franc (CHF) is a safe-haven asset, or the currency that investors tend to buy during times of market stress. This is due to Switzerland’s perceived status in the world: a stable economy, a strong export sector, large central bank reserves or a long-standing political stance towards neutrality in global conflicts, making the country’s currency a good choice for risk-averse investors. Turbulent times are likely to strengthen the value of the Swiss franc against other currencies that are seen as riskier to invest in.
The Swiss National Bank meets four times a year – once every three months, 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 expected to be above target in the foreseeable future, the bank will attempt to tame price growth by raising the interest rate. Higher interest rates are generally a positive for the Swiss Franc (CHF) because they lead to higher returns, making the country a more attractive place for investors. Conversely, low interest rates tend to weaken the Swiss franc.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can influence the valuation of the Swiss franc (CHF). The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or central bank currency reserves would lead to movements in the Swiss franc. In general, high economic growth, low unemployment and high confidence are good for the Swiss franc. Conversely, if economic data indicates weak momentum, the value of the Swiss franc is likely to decline.
As a small and open economy, Switzerland is highly dependent on the health of neighboring economies in the eurozone. The wider European Union is Switzerland’s main economic partner and a key political ally, so the stability of macroeconomic and monetary policy in the euro area is essential for Switzerland, and therefore for the Swiss franc (CHF). With such a dependence, some models suggest that the correlation between the fortunes of the euro (EUR) and the Swiss franc is over 90%, or close to perfect.
