CHF: Temporary Haven Flows Unlikely to Fuel SNB Rate Cut CHF: Temporary Haven Flows Unlikely to Fuel SNB Rate Cut CHF: Temporary Haven Flows Unlikely to Fuel SNB Rate Cut

CHF: Temporary Haven Flows Unlikely to Fuel SNB Rate Cut

Forex 5 minutes to read
Charu Chanana

Head of FX Strategy

Key points:

  • The upcoming Swiss National Bank (SNB) meeting holds significance amid heightened uncertainty, with market expectations leaning towards a potential rate cut due to the recent strength of the Swiss franc driven by safe-haven demand amid political turmoil in Europe, particularly in France.
  • Swiss inflation trends, including a 1.4% inflation rate in May 2024 and the SNB's projection for inflation to remain around 1.4%-1.5% for the second to fourth quarters of 2024, may weaken the prospect of a rate cut, especially if the SNB considers the franc's recent strength as a temporary trend.
  • If the SNB refrains from cutting rates on Thursday, the Swiss franc may have further potential for appreciation. Conversely, if a rate cut by the SNB occurs, the franc could experience a decline, particularly against currencies such as the Australian dollar (AUD).


The upcoming Swiss National Bank (SNB) meeting, scheduled for Thursday, is poised to be a significant event for market participants. With the current macro concerns centered on Europe, there is a degree of uncertainty surrounding the SNB's potential decision to cut rates by a further 25 basis points. While initial expectations leaned towards the SNB holding rates, the recent strength of the Swiss franc due to safe-haven demand has shifted the odds slightly in favor of a rate cut. The ongoing political turmoil in Europe, particularly in France, has contributed to the heightened demand for the Swiss franc as a safe-haven currency.


Inflation Trends Do Not Support a Rate Cut

Swiss inflation has shown a relatively contained trend compared to other advanced economies. In May 2024, the inflation rate stood at 1.4%, unchanged from April but up from 1% in March. This uptick has primarily been driven by factors such as energy costs, including a rise in road fuel prices, and higher rents.

The SNB's March forecast, based on the assumption of rates remaining at the current level of 1.5%, projected inflation to hover around 1.4%-1.5% for Q2 to Q4 2024, before declining to 1.2% in 2025 and 1.1% in 2026. Even if June inflation eases slightly, Q2 inflation will remain on track to achieve the SNB projections, weakening the prospect of a rate cut.

The SNB has also been concerned about the increase in r* or the neutral rate of interest, which also poses upside risks to the inflation outlook.


Franc Weakness Could Be More of a Concern

While the Swiss franc has experienced a notable surge of almost 3% against the euro this month, the move has been largely influenced by hedging-related fund flows stemming from risk aversion, contributing to the franc's sustained strength. If the SNB sees this trend as temporary, it may be able to avoid a rate cut in June.

Meanwhile, a resurgent US dollar on the back of the Federal Reserve dot plot showing only one rate cut this year could bring franc weakness back after the French election driven haven rally subsides. Carry allure of the franc as a funding currency is also likely to remain intact in the low-vol summer months, creating further downside pressures on CHF.

Comments from Swiss National Bank’s president Thomas Jordan have hinted earlier that weaker franc is a key risk to Swiss inflation, and the central bank could counteract this by selling foreign exchange. This is further evidence to expect that without any significant economic pressure or inflation slide, there is little reason to expect the SNB to cut rates as early as June.


CHF: Supported by Haven Flows For Now

For now, haven flows into the Swiss Franc could continue to provide strength. USDCHF broke below 200DMA and EURCHF has returned to 0.95 for the first time since February. These downtrends could remain intact, especially if the SNB does not cut rates on Thursday. Support for USDCHF seen at 50% fibo retracement of the December low at 0.8778, and that for EURCHF is closer to the 0.94 level.

In case the SNB cuts rates, a somewhat weaker franc can be seen in a knee-jerk reaction but it is likely to be erased by haven flows. As long as USDCHF remains below 100-day moving average at 0.8961, the downtrend could remain intact. EURCHF also faces a strong resistance at 0.9595. Franc strength has also been pronounced against the JPY, with CHFJPY rising 4.8% in the last three months and at record highs.

Franc weakness on the back of a rate cut could, however, be more pronounced against AUD where the RBA has recently kept a rate hike on the table, and the GBP if BOE proves to be relatively more hawkish at its June announcement which is due just a few hours after the SNB announcement on June 20. AUDCHF could move back above 38.2% fibo retracement of the February low at 0.5916, while GBPCHF could move back towards 100-day moving average at 1.1326.

Source: Bloomberg. Note: Past performance does not indicate future performance.


Forex, or FX, involves trading one currency such as the US dollar or Euro for another at an agreed exchange rate. While the forex market is the world’s largest market with round-the-clock trading, it is highly speculative, and you should understand the risks involved.

FX are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading FX with this provider. You should consider whether you understand how FX work and whether you can afford to take the high risk of losing your money.

Recent FX articles and podcasts:

Recent Macro articles and podcasts:

Weekly FX Chartbooks:

FX 101 Series:

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.