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USD/CHF gathers strength above 0.9150 on upbeat US NFP data, firmer US dollar

  • USD/CHF traes in positive territory for the fifth consecutive day round 0.9170 in Monday’s early European session. 
  • The stronger US December employment report supports the USD. 
  • Trump policy risks and safe-haven flows could boost the CHF. 

The USD/CHF pair gathers strength to near 0.9170 during the early European session on Monday, bolstered by the firmer US Dollar (USD). The upbeat US employment report supported the Federal Reserve's (Fed) cautious stance, creating a tailwind for the pair. Investors await the US December Producer Price Index (PPI) data for fresh impetus, which is due later on Tuesday. 

The Greenback extends its upside following a report that showed the US created more jobs than expected in December, supporting expectations that the Fed will pause its rate-cutting cycle at its January policy meeting. The CME FedWatch tool indicated the financial markets expect the Fed to keep its benchmark overnight interest rate unchanged in the 4.25%-4.50% range at its January meeting. The US central bank has lowered its policy rate by 100 basis points (bps) since starting its easing cycle in September 2024.

On the Swiss front, the economic uncertainties surrounding President-elect Donald Trump's administration's policies, along with the geopolitical tensions in the Middle East could boost the safe-haven flows, benefiting the Swiss Franc (CHF) against the USD. Israeli strikes continued throughout Gaza, including attacks near Gaza City, Nuseirat, and Bureij. Two attacks were also reported in the Houmin Valley in southern Lebanon, according to Lebanon’s National News Agency.

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.

Author

Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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USD/CHF gathers strength above 0.9150 on upbeat US NFP data, firmer US dollar