Skip to content 
by The Swiss Franc has recently strengthened, reaching around $0.85 (USD/CHF), a level not seen since the start of the year. The primary reason behind this rise is the weakening of the US dollar, mainly due to growing concerns about the state of the US economy.
A recent jobs report fell short of expectations, raising doubts about the economy’s resilience. As a result, there is increasing speculation that the Federal Reserve may need to lower interest rates three times this year rather than just the two rate cuts that were previously anticipated.
USDCHF Fundamental Analysis – 12-August-2024
Economic Uncertainty Drives Investors to Safety
Worries about a potential economic slowdown in the United States have led investors to seek safer assets, with the Swiss Franc benefiting from this shift in strategy. When economic conditions become uncertain, investors often move their money into assets perceived as safe havens, and the Swiss Franc is traditionally seen as one of the safest currencies.
This trend has added upward pressure on the Franc, contributing to its recent appreciation against the dollar.
Swiss Inflation Holds Steady, Supporting Rate Cut Expectations
Meanwhile, Switzerland’s inflation rate remained stable at 1.3% in July 2024, the same as in the previous month. This figure was in line with what the market had expected, and it has reinforced the belief that the Swiss National Bank (SNB) will proceed with another rate cut in September. This would mark the third consecutive rate reduction by the SNB this year.
The SNB has been proactive in its monetary policy, starting its rate cuts earlier than other central banks worldwide. So far, the SNB has reduced borrowing costs at both meetings this year.
- Also read: USDCNH Analysis – 12-August-2024
USDCHF Fundamental Analysis – 12-August-2024
The SNB’s early and decisive actions in reducing interest rates have set it apart from many other central banks, which have responded slower to changing economic conditions. By cutting rates early, the SNB aimed to keep inflation in check and support the Swiss economy during global uncertainty.
This proactive approach has played a key role in the Swiss franc’s recent behavior and continues to shape expectations for future monetary policy in Switzerland.
About The Author
