• USD/CHF trades slightly lower despite a tense geopolitical backdrop.
• Swiss inflation rises but remains broadly subdued, limiting tightening expectations.
• Safe-haven demand supports the Swiss Franc amid Middle East tensions.

USD/CHF trades around 0.7830 on Tuesday, down slightly by 0.07% on the day.

On the macroeconomic front, the latest Swiss data presents a mixed picture. The Consumer Price Index (CPI) rose by 0.3% MoM in April, up from 0.2% previously but below expectations of 0.4%. On a yearly basis, inflation reached 0.6%, compared to 0.3% in March, marking its highest level since January 2025. At the same time, manufacturing activity surprised to the upside on Monday, with the SVME Manufacturing Purchasing Managers Index (PMI) climbing to 54.5 in April, well above expectations and signaling solid expansion in the sector for a second consecutive month.

In this context, analysts at BBH note that inflation dynamics in Switzerland remain moderate despite higher energy prices. According to the analysts, core inflation even falls to a multi-year low, leaving the Swiss National Bank (SNB) with room to keep rates unchanged. The bank nevertheless believes that the Swiss Franc’s (CHF) safe-haven status should continue to support the currency, offsetting the impact of more accommodative policy expectations.

On the US side, the US Dollar (USD) benefits slightly from renewed demand, supported by rising Treasury yields and expectations of further monetary tightening. Minneapolis Federal Reserve (Fed) President Neel Kashkari stated that additional rate hikes cannot be ruled out, particularly due to inflationary pressures linked to higher energy prices in the context of the Iran war.

However, the Greenback’s advance remains limited against the Swiss Franc, whose appeal as a safe-haven currency strengthens in an environment marked by geopolitical uncertainty.