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Swiss franc weakness linked to carry dynamics and gold sensitivity
TD Securities expects the EUR/CHF level to hover around 0.93 into year-end 2026, tying ongoing CHF pressure to gold moves as SNB policy stays on hold.
TD Securities strategists say the Swiss franc’s underperformance since the February 2026 Iran shock reflects two main forces: muted low-yield carry dynamics and sensitivity to gold prices.
They argue that with the Swiss National Bank expected to keep policy on hold and Swiss sight deposits showing limited change in 2026, developments in global rate paths and commodities are likely to do more of the work for CHF crosses, rather than carry alone.
The note highlights that risk-off sentiment supported CHF only briefly in early March before a downtrend took hold, and it contrasts the current setup with the 2022 rate hiking cycle when CHF tended to rally as SNB sight deposits fell.
TD Securities adds that CHF weakness could persist if gold selloffs continue, especially in a scenario where the ECB pauses rate hikes after a September move, and it forecasts gold could fall to $3,900 per ounce in the near term before recovering.
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