USD/CHF gives back the gains it posted in the previous session, slipping toward 0.7950 during Asian trading on Tuesday. The Swiss Franc (CHF) is strengthening after Switzerland secured an agreement that will see US tariffs reduced to 15%, down sharply from the 39% rate imposed during the Trump administration. The deal marks a major relief for Switzerland, which had faced the highest tariff burden among developed economies.
Expectations that the Swiss National Bank (SNB) will keep its policy rate at 0% in December are also underpinning the CHF. SNB Vice President Antoine Martin recently reiterated that inflation is “expected to increase slightly,” reinforcing the likelihood of a steady policy stance.
The pair previously gained on Monday as the US Dollar (USD) firmed amid fading expectations for a Federal Reserve (Fed) rate cut next month. According to the CME FedWatch Tool, markets now price a 43% chance of a 25 bps cut in December, down from 62% a week earlier.
Fed Vice Chair Philip Jefferson commented Monday that labor-market risks now outweigh upside inflation risks, while advocating a gradual approach to any further easing. In contrast, Fed Governor Christopher Waller maintained a more dovish tone, saying the Fed should cut rates at the December meeting due to growing concerns about the labor market and a sharp slowdown in hiring.
