Is the strong franc weighing on the Swiss? SNB policy strongly influenced by international risk factors.

The Swiss franc is once again shining as a safe haven in times of global uncertainty. Trade tensions, US tariffs, and a slowdown in Europe are boosting demand for the stable franc, and the SNB is trying to mitigate the effects of its strength on the domestic economy..

CHF is strengthening against the backdrop of G10 currencies, gaining against most major pairs in recent weeks – except the US dollar – confirming its status as a classic “safe haven” during periods of increased global uncertainty. Markets are currently reacting to rising geopolitical tensions, including expanding US sanctions against Russia, the continuing threat of an escalating trade war, and uncertainty over US-China trade relations.The health of the European economy remains an additional risk factor, grappling with slower growth and political tensions, particularly in France, which are increasing demand for defensive currencies. In this climate, investors are once again turning to high-security assets such as the Swiss franc and gold, protecting capital from potential market turbulence.

Against this background, today's SNB minutes confirmed that the central bank's policy remains strongly influenced by international risk factors. Swiss National Bank He noted that increased import tariffs imposed by the United States are slowing global trade and limiting the purchasing power of American households, which is also indirectly impacting Swiss exports – particularly in the watch sector, which saw a double-digit decline in sales in the US market in September. At the same time, the bank pointed out that the appreciation of the franc, reinforced by capital inflows to safe havens, poses a significant challenge to the economy's competitiveness, especially in the export of luxury goods and pharmaceuticals.

SNB prepared to intervene in the market

In terms of monetary policy, the SNB stressed that maintaining interest rates at 0% is still justified as it allows for limiting the pressure on further strengthening of the currency and stabilising financial conditions. The statement shows that the central bank is prepared to intervene in the currency market if the Swiss franc exchange rate begins to deviate from the levels considered to be equilibrium.While inflation remains moderate and in line with its price stability objective, the SNB is concerned that persistent global uncertainty and the strong Swiss franc exchange rate could dampen domestic economic growth in the coming months, justifying maintaining an expansionary monetary policy stance over the longer term.

However, the Swiss franc isn't everything for the markets. So the question is, what else should we pay special attention to today? Today's scheduled events include the Central Bank of Canada's interest rate decision, data on US natural gas inventories, and a report on Canadian retail sales. The market is also monitoring the details of further sanctions against Russia, India's reaction to US pressure on oil imports and progress in the Trump-Xi trade talks.The focus can be expected to be on continued trading around Tesla and SAP shares following their earnings releases, as well as the reaction of commodity and energy companies to new US sanctions. The FX market itself is currently dominated by the currencies of the Antipodes, often identified as "commodity" currencies. The Japanese yen is seeing a significant downward correction. Meanwhile, the Polish złoty is losing ground against most major currencies. The dollar is currently trading at PLN 3,6464, the euro at PLN 4,2309, the Swiss franc at PLN 4,5744, and the pound at PLN 4,8682.

Source: Mateusz Czyżkowski, XTB