Outlook
The Swiss franc remains well supported by a cautious SNB stance in a world of very low inflation. Policy is unlikely to flip quickly, but the main swing factors are evolving eurozone growth and global trade dynamics. If the franc keeps strengthening, talk of negative rates could re-emerge to curb the currency’s move. Conversely, stronger-than-expected eurozone growth could relieve CHF appreciation pressure and even push the SNB toward tightening before 2027. The export backdrop remains a risk; tariffs and a weaker trade balance could weigh on Swiss growth and temper franc strength, though safe-haven demand can still lift the currency in stressed times.
Key drivers
- SNB maintains 0% policy rate with inflation forecasts near target (0.2% in 2025, 0.3% in 2026); policy will stay cautious unless conditions change. MUFG warns that if the franc remains strong, negative rates could be reintroduced to curb currency strength.
- Eurozone growth outlook matters: UBS says stronger eurozone activity could reduce CHF appreciation pressure and potentially lead to a rate rise by the SNB before 2027.
- Trade dynamics: Switzerland’s May 2025 trade surplus nearly halved, with US exports down more than 40% for two months, contributing to franc strength as export resilience weakens.
- Trade policy risk: The July 2025 tariff shock (39% on Swiss exports) underscored exposure of an export-led economy to policy moves, adding uncertainty to the CHF trajectory.
- Market price context: CHF/USD near 14-day highs around 1.2673, about 2% above the 3-month average (1.2518) and trading within a broad 1.2335–1.2691 range. CHF/EUR at 1.0781 (within 1.0648–1.0846 range); CHF/GBP at 0.9386 (range 0.9298–0.9566); CHF/JPY around 200.9 (range 189.5–200.9). These levels reflect a mixed, range-bound environment with episodic spikes on policy or growth signals.
Range
CHFUSD: 1.2335–1.2691 (current near 1.2673; 14-day high near 1.2673; 3-month avg 1.2518)
CHFEUR: 1.0648–1.0846 (current 1.0781)
CHFGBP: 0.9298–0.9566 (current 0.9386)
CHFJPY: 189.5–200.9 (current 200.9; 3-month avg 195.2)
What could change it
- SNB policy shifts: actual reintroduction of negative rates if the franc strengthens, or unexpected rate hikes if eurozone momentum prompts tighter Swiss policy.
- Eurozone data surprises: stronger growth could ease CHF strength and limit upside, or weaker data could renew CHF bids.
- Trade and growth developments: further deterioration in export demand or additional tariff moves could weigh on the CHF, while improvements in the export outlook could support a softer franc.
- Market risk sentiment: a move into risk-off or risk-on environments can drive safe-haven flows into or out of the Swiss franc, respectively.
