Dollar climbs to nearly one-year high against Swiss franc
The Swiss franc has seen a period of notable weakness against the strength of the US dollar since October, with the USD/CHF rising almost 10% in just over three months. This dynamic can be explained by several key factors linked to the American economy and the international context. Robust U.S. economic data, particularly on employment and inflation, has reduced the Fed’s rate cut prospects and pushed the U.S. central bank to adopt a more hawkish stance.
Since the end of summer, the unemployment rate has stopped increasing and inflation has stopped falling. The Fed therefore adopted more restrictive rhetoric in December, signaling that key rates will remain high for longer than expected. The market, which anticipated around four rate cuts for the year, revised its expectations to less than two reductions, reinforcing the attractiveness of US bonds.
The international context also accentuates the strength of the dollar. In Europe, political instability, particularly with the breakdown of the German government coalition in November, has increased uncertainty. In China, economic recovery remains moderate, limited by ill-suited measures to stimulate domestic demand.
As for the Swiss franc, the Swiss National Bank (SNB) maintains a hawkish posture, but with less intensity than that of the Fed. This divergence in monetary policy is partly explained by inflationary dynamics. While the United States still faces inflation well above its target, inflation in Switzerland continues to decelerate. It fell to 0.6% in December, well below the SNB’s 2% target, limiting the latter’s need to further tighten monetary policy.
USD/CHF daily price chart – key levels
Swiss
