Summary:
The Swiss franc was steady Wednesday despite improved US inflation, while US protectionism may continue to weaken the dollar long-term.
The Swiss franc was largely unchanged on Wednesday despite of improving US consumer inflation. Longer-term, the more protectionist stance of the United States is expected to keep hurting the greenback.
Swiss inflation could enter negative territory in the coming months, but this will not necessarily trigger a reaction by the SNB, Chairman Martin Schlegel said on Tuesday.
Swiss inflation eased to 0% in April, the lowest reading for four years. Therefore, markets currently price in a 75% probability the central bank will cut the rate 25 bps at its next meeting in June.
Signs of economic weakness also points to the necessity of loosening. Swiss exports to the US plummeted in April, showing the fallout from President Trump's tariff policy.
Foreign sales, adjusted for seasonal swings, declined 36% from March, according to official data. That come after two months of robust export numbers as exporters were frontloading shipments.
US Treasury Secretary Bessent has said that Switzerland is "at the front of the queue" for a trade deal. The country initially was hit with 31% tariffs before Trump announced the suspension of many of his levies.
The Swiss franc has consolidated its recent gains, and a bearish MACD divergence suggests there are upside risks ahead. The resistance could lie around 0.8250 per dollar.
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