The Swiss franc weakened toward 0.83 per dollar, its lowest level since May 19, as global risk sentiment improved following a U.S. federal court ruling that blocked former President Donald Trump’s sweeping reciprocal tariffs.
Swiss franc at over one-week low
The verdict was interpreted as a de-escalation of protectionist trade measures, reducing investor appetite for traditional safe-haven assets like the franc. Contributing to the shift in tone, President Trump also delayed a previously announced 50% tariff hike on European Union imports until July 9th, following a phone call with European Commission President Ursula von der Leyen. The delay has further eased near-term geopolitical tensions, nudging global capital away from defensive currencies.
The franc also faced downward pressure from a broadly firmer U.S. dollar, which advanced after the release of hawkish Federal Open Market Committee (FOMC) minutes. The minutes revealed that Fed officials opted to hold rates steady amid persistent economic uncertainties, but many retained a tightening bias due to upside inflation risks. The combination of stable U.S. monetary policy and improving global trade dynamics has prompted investors to rotate into higher-yielding assets, dampening demand for the low-yielding Swiss franc.
Domestic news
On the domestic front, attention has turned to the Swiss National Bank’s (SNB) upcoming policy decision on June 19. Markets are pricing in a high probability of a further rate cut, which would bring the benchmark policy rate down to zero, after five consecutive cuts since March 2024 brought it from 1.75% to the current 0.25%. The SNB has taken an aggressively accommodative stance in response to mounting deflationary pressures and a sluggish economic outlook. April’s inflation data reinforced those concerns, with headline CPI remaining flat on a year-over-year basis and core inflation easing to 0.6% from 0.9%, suggesting underlying demand remains weak.
Adding to the dovish case, business sentiment surveys and manufacturing PMI readings have pointed to continued softness in domestic activity, prompting speculation that the SNB may even consider unconventional measures if price pressures fail to materialize in the coming quarters. As the franc drifts lower, investors will be closely monitoring both the SNB’s tone and broader global macroeconomic developments to assess whether the currency’s decline could deepen or stabilize in the near term.
