USD/CHF sinks to six-week low as strong Swiss GDP, softer Retail Sales boost Swiss Franc

• The Swiss Franc rises for the third straight session, with USD/CHF down nearly 0.70% intraday.
• Switzerland’s Q1 GDP beat forecasts with 0.5% QoQ growth, while April Retail Sales missed expectations, rising just 1.3% YoY.
• Traders are eyeing the US ISM Manufacturing PMI and Powell’s speech later on Monday,  Swiss CPI due on Tuesday.

The Swiss Franc (CHF) extends its winning streak against the US Dollar (USD) for the third consecutive day on Monday, starting the week on a firm footing as a broadly weak US Dollar and cautious global sentiment continue to underpin demand for the safe-haven currency.

At the time of writing, the USD/CHF pair is down nearly 0.70% intraday, consolidating below the previous week's low to trade near 0.8178 during the European session, its lowest level since April 21. The move comes as investors react to Switzerland’s stronger-than-expected first-quarter Gross Domestic Product (GDP) figures and a softer Retail Sales print, which further boosted the Swiss Franc’s appeal.

Breaking down Monday’s economic releases, Switzerland’s economy grew by 0.5% QoQ, up from a revised 0.3% in the previous quarter and beating market expectations of 0.4%. On an annual basis, GDP expanded by 2.0%, accelerating from 1.6%  and surpassing the forecast of a 1.5% increase. The stronger expansion was driven mainly by a surge in exports as Swiss companies front-loaded shipments to the United States (US) to beat looming tariff deadlines.

“In particular, exports to the US rose sharply, pointing to possible front-loading in connection with US trade policy,” said the State Secretariat for Economic Affairs.

The stronger expansion was also underpinned by solid gains in manufacturing, which grew 2.1% in Q1 after a 1.2% rise in Q4. The construction sector also rebounded, posting a 1.1% increase after stagnating in the previous quarter. Meanwhile, activity in trade, repair of motor vehicles, and motorcycles surged by 2.1%, up sharply from just 0.3% in Q4, indicating broad-based growth across key sectors.

On the consumer front, Retail Sales in Switzerland increased by 1.3% YoY in April, easing from a 2.2% increase in March and falling short of market expectations for a 2.5% rise. The weaker reading suggests consumers may be growing more cautious despite the broader economy showing signs of strength.

Looking ahead, all eyes will be on the US ISM Manufacturing Purchasing Managers Index (PMI) and Fed Chair Jerome Powell’s speech later today, both of which could impact the US Dollar. On the Swiss side, fresh inflation data due to be released on Tuesday may offer hints on where the Swiss National Bank (SNB) stands on interest rates.