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USD/CHF holds positive ground above 0.8200, eyes on US-China trade talks

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USD/CHF holds positive ground above 0.8200, eyes on US-China trade talks

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update 2025.06.10 13:53
USD/CHF holds positive ground above 0.8200, eyes on US-China trade talks

update 2025.06.10 13:53

  • USD/CHF gains ground to near 0.8225 in Tuesday's Asian session.
  • US and China set to continue trade talks, easing fear of trade tensions.
  • Geopolitical risks could support the CHF and act as a headwind for the cross.  

The USD/CHF pair trades in positive territory around 0.8225 during the Asian trading hours on Tuesday. The optimism over the resumption of US-China trade talks provides some support for the Greenback. The US Consumer Price Index (CPI) report for May will be in the spotlight on Wednesday. 

US-China trade talks were scheduled to continue in London on Tuesday, as the world's top two economies sought to resolve disagreements following a call between the leaders of the two countries. Trump said that the talks were going well and he was "only getting good reports," according to Reuters.

Investors will keep an eye on the US CPI inflation data for May, which is due on Wednesday. The report could offer some hints about the tariff impact and interest rate outlook. If the report shows a hotter-than-expected inflation outcome, this could lift the USD against the Swiss Franc (CHF). 

Meanwhile, Kyiv and Odesa came under another mass Russian attack early Tuesday, involving ballistic missiles and drones. Explosions were heard across the capital as air defense systems engaged the targets. Persistent geopolitical tensions in the Middle East and the ongoing Russia-Ukraine war could boost the safe-haven flows, benefiting the CHF. 

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.


Date

Created

 : 2025.06.10

Update

Last updated

 : 2025.06.10

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