The Swiss Franc eased against the US Dollar on Thursday as the Dollar strengthened. USD/CHF traded near 0.7750 after an intraday low around 0.7694.
Swiss trade data showed exports rose to CHF 22,229 million in January from CHF 19,866 million. Imports fell to CHF 18,411 million from CHF 18,932 million, lifting the trade surplus to CHF 3,818 million from CHF 934 million.
Swiss Output Trends
Industrial Production declined 0.7% year on year in the fourth quarter. This followed a 2% expansion in the previous reading.
The US Dollar firmed after Federal Reserve meeting minutes released on Wednesday pointed to a cautious policy approach. The minutes indicated interest rates may stay steady for a period while officials assess incoming data, with scope for future rate rises if inflation stays above target.
The minutes also said rate cuts could be considered later this year if price pressures ease as expected. They noted that most participants saw labour market conditions showing some signs of stabilisation.
Markets are pricing in around two US rate cuts in the second half of the year. The US Dollar Index (DXY) traded near 97.82, its highest level since February 6.
Key Upcoming US Data
Thursday’s US releases include weekly Initial Jobless Claims and the Philadelphia Fed Manufacturing Survey. Attention then turns to Friday’s Core PCE Price Index and the advance reading of fourth-quarter US GDP.
Looking back at early 2025, we saw the US Dollar showing strength due to a cautious Federal Reserve. The USD/CHF was trading around 0.7750 as officials debated keeping rates steady for longer. This caution proved justified, as the Fed only delivered a single quarter-point rate cut late in 2025.
This contrasts sharply with the Swiss National Bank, which, facing weak industrial data, cut its policy rate twice during 2025 to its current 1.00%. This growing policy divergence widened the interest rate differential in favor of the dollar. As a result, the USD/CHF pair has rallied significantly over the past year and is now trading near 0.8900.
Currently, US inflation remains stickier than expected, with the latest Consumer Price Index (CPI) reading for January 2026 coming in at 2.8%. Meanwhile, Swiss inflation sits at a much lower 1.2%, giving the SNB little reason to tighten policy. This environment continues to favor long USD/CHF positions through futures contracts to capture both potential price appreciation and the positive carry.
Given the uncertainty around the timing of further Fed cuts in 2026, we are seeing a rise in foreign exchange market volatility. Traders should consider using options to manage this environment. Buying USD/CHF call options can provide exposure to further upside while clearly defining the maximum risk on the position.
