USD/CHF steadies around 0.8200 after SNB announces a quarter basis point rate cut

USD/CHF holds gains as the SNB reduced the benchmark Sight Deposit Rate by 25 basis points in Q2.
Switzerland’s trade surplus narrowed to CHF 2.0 billion in May, from April’s CHF 5.4 billion.
Risk aversion advances due to potential for the United States to become directly involved in the Israel-Iran dispute.

Akhtar Faruqui FXStreet

USD/CHF continues its winning streak for the fifth consecutive session, trading around 0.8200 during the European hours on Thursday. The pair holds gains following the release of the interest rate decision by the Swiss National Bank (SNB).

The Swiss Franc (CHF) faces challenges as the SNB decided to deliver a quarter basis point rate cut in the second quarter, bringing the benchmark Sight Deposit Rate to 0.00%, as widely expected. The weakening of the CHF could be restrained as markets were also pricing in 25% odds of a 50 basis point cut. SNB’s officials keep the door open for negative rates but emphasize it remains a less preferred policy option.

Moreover, Switzerland’s trade surplus declined to CHF 2.0 billion in May from a downwardly revised CHF 5.4 billion in April. The Swiss trade balance has marked the smallest surplus since December 2023, as monthly exports fell 13.6% to CHF 21.0 billion.

The USD/CHF pair appreciates as the US Dollar (USD) receives support as traders adopt caution amid escalating tensions between Israel and Iran. Bloomberg reported on Thursday that “US officials prepare for possible Iran strike in coming days.” “The US plans for any Iran attack continue to evolve.” Another report from the Wall Street Journal suggests that US President Trump had approved attack plans on Tuesday for Iran, but wanted to see if Tehran would abandon its nuclear program.

Economic Indicator

SNB Interest Rate Decision

The Swiss National Bank (SNB) announces its interest rate decision after each of the Bank’s four scheduled annual meetings, one per quarter. Generally, if the SNB is hawkish about the inflation outlook of the economy and raises interest rates, it is bullish for the Swiss Franc (CHF). Likewise, if the SNB has a dovish view on the economy and keeps interest rates unchanged, or cuts them, it is usually bearish for CHF.

EUR/USD trims gains, back below 1.1800

EUR/USD now loses some upside momentum, returning to the area below the 1.1800 support as the Greenback manages to regain some composure following the SCOTUS-led pullback earlier in the session.

GBP/USD off highs, recedes to the sub-1.3500 area

Following earlier highs north of 1.3500 the figure, GBP/USD now faces some renewed downside pressure, revisiting the 1.3490 zone as the US Dollar manages to regain some upside impulse in the latter part of the NA session on Friday.

Gold climbs to weekly tops, approaches $5,100/oz

Gold keeps the bid tone well in place at the end of the week, now hitting fresh weekly highs and retargeting the key $5,100 mark per troy ounce. The move higher in the yellow metal comes in response to ongoing geopolitical tensions in the Middle East and modest losses in the US Dollar.