USD/CHF falls as Swiss growth outlook dims, US Dollar struggles

• The Swiss Franc remains under pressure as domestic economic concerns deepen.
• SECO maintains Switzerland's 2025 growth forecast at 1.3% and lowers its 2026 projection to 0.9%.
• The US Dollar loses ground due to the government shutdown and Fed rate cut expectations.

USD/CHF falls around 0.7910 on Monday, down 0.30% on the day at the time of writing. The advance in the Swiss Franc (CHF) continues to weigh on USD/CHF despite growing concerns about the slowdown in Switzerland's economy which limits the currency's upside.

The State Secretariat for Economic Affairs (SECO) confirmed in its October outlook that Switzerland's Gross Domestic Product (GDP) will grow by only 1.3% this year, a pace below the historical average. The institution also cut its 2026 forecast to 0.9% from 1.2% previously, highlighting a significant loss of momentum in the second half of 2025. These lackluster projections dampen investor confidence ahead of Tuesday's release of Switzerland's trade balance data.

For its part, the US Dollar (USD) remains pressured by the ongoing US government shutdown, with no budget agreement in sight. The political stalemate in Washington, the third-longest funding lapse in modern history, continues to fuel concerns over growth and strengthens expectations for further monetary easing from the Federal Reserve (Fed).

According to the CME FedWatch tool, markets are pricing in nearly a 100% chance of an interest rate cut at the October meeting and a 96% chance of another reduction in December. Several Fed officials have suggested that additional easing may be warranted if labor market risks increase, as long as inflation remains contained.

However, USD losses could be limited by signs of easing trade tensions between the United States (US) and China. US President Donald Trump said he wanted China to resume soybean purchases at previous levels, adding that a partial reduction in tariffs could be possible if Beijing "does things for us too." These remarks, combined with the planned meeting this week between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, have supported a mild improvement in risk appetite, reducing demand for the CHF as a safe-haven asset.