• The US Dollar remains weak, with USD/CHF back around 0.7950 amid rising trade tensions between Washington and Beijing.
• Markets are almost fully pricing in further Federal Reserve rate cuts before year-end.
• In Switzerland, SECO forecasts slower growth in 2025, adding to the Swiss Franc’s cautious outlook.

USD/CHF falls 0.20% on Thursday, trading around 0.7950 at the time of writing after hitting a two-week low of 0.7933 earlier in the day. The US Dollar (USD) remains under pressure as escalating US-China tensions continue to support demand for safe-haven assets such as the Swiss Franc (CHF).

US President Donald Trump reignited trade concerns, declaring that the United States (US) is already engaged in a “full-blown trade war” with China and threatening to impose 100% tariffs on Chinese imports. Meanwhile, Treasury Secretary Scott Bessent confirmed that Trump will meet with Chinese President Xi Jinping later this month in South Korea, suggesting that an extension of the trade truce remains possible if Beijing delays its new export restrictions.

On the monetary policy front, markets continue to anticipate further easing by the Federal Reserve (Fed). According to the CME FedWatch tool, there is a 97% chance of a 25-basis-point rate cut at the October meeting, followed by a more than 93% chance of another cut in December. Fed Governor Christopher Waller reiterated on Thursday that “cutting rates again is the right thing to do,” though he added that the pace of reductions could slow if Gross Domestic Product (GDP) growth remains resilient.

Meanwhile, the US government shutdown continues to weigh on sentiment. The US Senate failed for the ninth time to pass a spending bill, and the White House warned that more than 10,000 federal jobs could be lost if the impasse drags on. This budget uncertainty is eroding confidence and reinforcing expectations of a slowdown in the US economy.

In Switzerland, the State Secretariat for Economic Affairs (SECO) maintained its 2025 GDP growth forecast at 1.3% but lowered its 2026 projection to 0.9% (June forecast was at 1.2%), citing the negative impact of US tariffs and the strong Swiss Franc on exports. SECO also expects inflation to remain subdued at 0.2% in 2025 and 0.5% in 2026, reinforcing expectations that the Swiss National Bank (SNB) will maintain a cautious monetary stance.