USD/CHF remains stronger near 0.7750 ahead of US Q4 GDP, PCE inflation data

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USD/CHF extends its winning streak for the fifth successive session, trading around 0.7760 during the Asian hours on Friday.

USD/CHF holds firm as the US Dollar gains after Initial Jobless Claims fell to 206K, below forecasts.
The Greenback stays supported as January FOMC Minutes revive rate hike speculation.
Pair’s gains limited as safe-haven CHF strengthens amid persistent US-Iran tensions.

USD/CHF extends its winning streak for the fifth successive session, trading around 0.7760 during the Asian hours on Friday. The pair holds firm as the US Dollar (USD) draws support after the US Department of Labor (DOL) reported that Initial Jobless Claims declined to 206K for the week ending February 14, down from the prior week’s revised 229K and below the 225K consensus forecast. Market participants now turn their focus to Friday’s preliminary US Q4 Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE) data for fresh direction.

The Greenback could remain underpinned as the latest Federal Open Market Committee (FOMC) Minutes from the January meeting reignited speculation about potential rate hikes should inflation remain persistent. While most policymakers supported keeping rates unchanged, only a few favored a cut, and officials indicated they would consider easing if inflation moderates as anticipated.

However, the USD/CHF pair’s gains are capped as the Swiss Franc (CHF) benefits from safe-haven demand amid lingering United States (US)-Iran tensions. Both nations stalled nuclear negotiations, which have heightened fears of possible military action. Warnings from Russian officials over the consequences of any US strike on Iran have further amplified market caution and global uncertainty.

Additionally, the CHF finds support as expectations for near-term rate cuts by the Swiss National Bank (SNB) have diminished. Switzerland’s inflation remained slightly positive at 0.1% in January, at the lower bound of the SNB’s 0–2% target range and broadly in line with its Q1 projections, reinforcing views that the central bank will likely keep rates steady at its March meeting and possibly through 2026.

Swiss Franc FAQs

What key factors drive the Swiss Franc?

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.

Why is the Swiss Franc considered a safe-haven currency?

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.

How do decisions of the Swiss National Bank impact the Swiss Franc?

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.

How does economic data influence the value of the Swiss Franc?

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.

How does the Eurozone monetary policy affect the Swiss Franc?

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.