Insights 
VT 
The US dollar remains the leading global currency, according to Martin Schlegel, Chairman of the Swiss National Bank. He asserts that the Federal Reserve holds a pivotal role in the international financial system and that no alternative to the US dollar currently exists.
Determining the impact of tariffs on Switzerland proves challenging. The Swiss National Bank maintains a high threshold for entering negative interest rates, indicating they will only consider this move if absolutely necessary.
Preserving Central Bank Independence
Schlegel emphasises the importance of preserving the independence of central banks. Despite speculations about the decline of the US dollar, it continues to be central to the global financial system. Any potential change in its dominance would take decades to materialise.
Regarding Swiss monetary policy, no further rate adjustments are anticipated for now. The bank would need compelling justification to explore negative interest rate territory.
The US dollar’s dominance is not going anywhere. Recent SWIFT data for August 2025 shows the dollar’s share in global payments has held firm at over 47%. The Federal Reserve remains the key driver for the entire international financial system, and there is simply no real alternative right now.
This reinforces the dollar’s role as a primary funding currency, making it unattractive to short outright. We should consider strategies that benefit from this stability, like selling far out-of-the-money puts on the dollar index (DXY). Implied volatility on major dollar pairs has been trending lower than the spikes we saw back in 2023, suggesting the market expects this strength to continue.
Trading Strategies and Currency Analysis
In Switzerland, monetary policy seems to be on a long pause. With Swiss inflation for August 2025 coming in at a manageable 1.6%, there is no pressure on the central bank to make any moves. The high bar for returning to negative rates, a policy we remember from 2015 to 2022, suggests the Swiss franc will not be intentionally weakened.
For derivative traders, this points toward stability in the Swiss franc, especially against the euro. We can look at selling short-dated strangles on EUR/CHF, betting that the pair will remain in a tight range. Given the Fed’s relatively higher policy rate, buying USD/CHF call options is also a viable strategy to capture upside from widening interest rate differentials.
We’ve seen this narrative before, as calls for the dollar’s demise were loud back in early 2024, yet its share of allocated central bank reserves has held firm at 58% through the second quarter of this year. Any structural shift away from the dollar will likely take decades, not weeks. A core long-dollar bias, therefore, remains the sensible default position for the coming weeks.
