Swiss Franc steadies as markets eye US tariff deadline, SNB reports major FX losses

• The Swiss Franc stabilizes after a six-day losing streak, with markets turning cautious ahead of the August 1 US tariff deadline.
• USD/CHF eases modestly from a five-week high of 0.8151, despite strong US data and a hawkish hold from the Federal Reserve.
• SNB reports a loss of CHF 15.3 billion for the first half of 2025, primarily driven by a sharp decline in the US Dollar, wiping CHF 22.7 billion from the FX portfolio.

The Swiss Franc (CHF) steadies against the US Dollar (USD) on Thursday, snapping a six-day losing streak as investors rotate back into the Franc amid renewed safe-haven demand. The cautious tone in markets comes ahead of the looming US tariff deadline on Friday, August 1, with US President Donald Trump reiterating that new tariffs will be imposed on countries without finalized trade agreements. The shift in sentiment reflects heightened uncertainty surrounding global trade policy, prompting a pause in recent USD strength against the Swiss Franc.

The USD/CHF pair hit its highest level in over five weeks on Wednesday, climbing to 0.8125 after the Federal Reserve (Fed) left interest rates unchanged, as expected. However, the pair has since edged lower and is currently trading around 0.8126 during the American session, down nearly 0.30% on the day. The mild pullback comes despite stronger-than-expected US economic data, indicating a round of profit-taking and a shift in sentiment ahead of the tariff deadline.

The latest data from the US Bureau of Economic Analysis showed that inflation remains persistent, with the core Personal Consumption Expenditures (PCE) Price Index -- the Fed's preferred inflation gauge -- rising 0.3% MoM in June, in line with expectations and faster than May's 0.2% increase. On an annual basis, core PCE held steady at 2.8%, slightly above the 2.7% forecast. The headline PCE Price Index also climbed 0.3% MoM and 2.6% YoY, both beating expectations, pointing to sticky underlying price pressures.

Personal Spending climbed 0.3% MoM, just shy of the 0.4% forecast, yet rebounded strongly from May's 0.1% drop, signaling resilient consumer activity. Meanwhile, Personal Income rose 0.3% MoM, beating expectations of 0.2% and recovering from a prior 0.4% decline.

In addition, labor market data offered further evidence of ongoing economic strength. Initial Jobless Claims came in at 218K for the week, better than the expected 224K, underscoring the persistent tightness in the US labor market.

Meanwhile, fresh data released by the Swiss Federal Statistical Office on Thursday further boosted demand for the safe-haven Franc. Real Retail Sales rose 3.8% YoY in June, sharply beating expectations of 0.2% and accelerating from May's upwardly revised 0.3% (previously 0%). On a monthly basis, Retail Sales climbed 1.5% in June, rebounding from a revised 0.4% drop in May and marking the first positive reading in five months.

Separately, the Swiss National Bank (SNB) reported a CHF 15.3 billion loss for the first half of 2025, largely due to valuation losses on its foreign currency investments as the US Dollar slumped more than 10%, largely due to the impact of President Trump's tariff policies. The decline wiped out CHF 22.7 billion in the SNB's foreign currency holdings, highlighting the central bank's sensitivity to global exchange rate movements. Despite an 11% surge in gold prices, which generated a CHF 8.6 billion gain. The report underscores the central bank's exposure to global market movements and the ongoing volatility stemming from trade policy uncertainty.