The Swiss franc strengthened broadly on Thursday as global risk appetite deteriorated amid renewed concerns about China’s property sector and escalating geopolitical tensions in the Middle East. USD/CHF fell to 0.8952, its lowest level in six weeks.
Safe-Haven Flows
Along with the Swiss franc, Japanese yen and US Treasuries also attracted safe-haven buying. The VIX volatility index rose 8% to 16.4, its highest level in a month, signalling growing investor unease.
EUR/CHF fell 0.4% to 0.9680, while GBP/CHF dropped 0.5% to 1.1380. The Swiss National Bank (SNB) has historically been reluctant to allow the franc to strengthen too aggressively, preferring a more stable exchange rate to protect the export-oriented Swiss economy.
SNB Policy Considerations
The SNB surprised markets earlier this year by cutting rates before the ECB — a rare move that signalled confidence in its inflation outlook. A strengthening franc naturally provides some disinflationary pressure, reducing the urgency for additional rate cuts in the near term.
“When you see the franc strengthening like this, it tells you something about global risk appetite. Investors are nervous and looking for safety.” — FX Strategist