Swiss Franc Softens as Unemployment Data Nears Release

USD/CHF rose on Friday, moving to around 0.8080 as Asian trading resumed, having recovered from the previous day’s decline. The dollar’s strength continued, but its upside potential may be tempered by easing expectations for further Federal Reserve tightening. Market participants are watching the upcoming Swiss unemployment data.

Fed Governor Christopher Waller said he favors holding rates steady at the September meeting, assuming the forthcoming inflation figures show no significant surprises.

Waller’s dovish remarks contrasted sharply with the hawkish tone of former Chair Kevin Warsh just a week prior. Consequently, market expectations shifted, and the CME FedWatch tool now shows a 50.2% probability of a September rate hike, down from 63.2% the day before.

Attention is turning to the August U.S. employment report for additional guidance on monetary policy. Analysts expect nonfarm payrolls to rise by 56,000 jobs, with the unemployment rate holding steady at 4.1%.

Swiss Franc Gains Support as Inflation Beats SNB Projection

Brown Brothers Harriman analysts noted that the latest Swiss data surprised to the upside, with headline CPI climbing to 0.8% year‑over‑year (consensus 0.5%)—the highest level since September 2024 and above the SNB’s Q3 forecast of 0.6%. Core CPI also rose to 0.4% year‑over‑year (consensus 0.3%), marking the fourth consecutive 0.3% reading and indicating a broad‑based strengthening of Swiss inflation.

Swiss Franc FAQs

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.

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.

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.

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.

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.

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