The Swiss franc has performed well in 2025, registering a 14.34% increase year-to-date (YTD) against the US dollar. The euro follows closely with a 13.69% rise, buoyed by robust growth and diminished political risks in Europe. The British pound shows resilience, growing by 8.77% despite economic uncertainties. The Australian dollar and Japanese yen have also seen gains, with increases of 7.67% and 6.87% respectively. The Canadian dollar lags, rising by only 4.42%, impacted by subdued oil prices and domestic growth challenges.

In September, currency dynamics shifted with the Australian dollar climbing 1.96% month-to-date (MTD), driven by increased commodity demand and positive growth outlooks in the Asia-Pacific region. The New Zealand dollar also gained, rising 1.17%, reflecting a short-term uptick in risk appetite. Meanwhile, the Swiss franc remains positive but with slower growth, and the euro and British pound have seen modest rises. The Japanese yen and Canadian dollar slipped slightly, by 0.11% and 0.26%.

Shift in Currency Preference

The performance year-to-date reflects a preference for safe-haven currencies amid global uncertainties. September marks a potential shift towards commodity currencies as risk appetite grows, although the broader trend remains reliant on global demand and central bank signals.

Given the sharp turn in September, we should consider if the year-long love for safe havens is fading. The Australian dollar’s recent strength, backed by iron ore prices climbing to $135 a tonne on renewed Chinese demand, suggests a new appetite for risk. This pivot means we should re-evaluate our long-held positions in the Swiss franc.

For derivative traders, this signals a potential rise in volatility, especially in commodity-linked currency pairs. Buying call options on the AUD/USD with expirations in the next 30 to 60 days could capture further upside if this risk-on mood continues. This strategy allows us to profit from the rally while limiting our downside if the trend proves to be just a temporary bounce.

The Swiss franc’s dominance for most of 2025 has been fueled by global uncertainty and the Swiss National Bank’s firm stance on inflation. However, with the franc’s monthly gains slowing, we could look at put options on USD/CHF to hedge against a potential reversal or a peak in its strength. The franc remains a solid defensive asset, so outright shorting it feels premature and risky.

Euro and Dollar Dynamics

The euro’s steady climb this year is now supported by tangible economic improvements, as seen in the recent flash manufacturing PMI for September, which came in at 50.8, its first expansionary reading in over a year. We can use bullish option spreads on EUR/USD to capitalize on this more gradual and fundamentally-backed strength. This offers a more conservative play compared to the more volatile Aussie dollar.

Driving all of this is the persistent weakness of the U.S. dollar, which has been underperforming since the Federal Reserve’s 25-basis-point rate cut back in July 2025. Looking at history, Fed pivot cycles, like the one we saw in 2019, often lead to a prolonged period of dollar weakness as capital flows to regions with better growth prospects. We should anticipate this dollar softness to continue as long as global growth expectations remain firm.

Finally, the laggards like the Japanese yen and Canadian dollar tell an important part of the story. The yen is suffering from its low-yield status while other central banks remain tight, and the Canadian dollar has been weighed down by stagnant oil prices. This weakness makes pairs like AUD/CAD particularly interesting, and we could structure trades that go long on the Aussie while shorting the loonie to play this divergence in commodity trends.

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