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USD/CHF slips as Swiss prices data supports a stronger franc

Swiss Producer and Import Prices fell 2.1% year-over-year in July, extending a multi-year deflation trend that keeps inflation risks limited, according to OCBC.

Reported · Written up by our desk · Major Pairs

USD/CHF pulled back after three straight days of gains, trading around 0.8130 during Thursday’s European session, as the Swiss franc held firm following Swiss Producer and Import Prices data for July, according to FXStreet.

The data showed Swiss Producer and Import Prices down 2.1% year-over-year in July, matching the prior month and extending a deflationary trend over more than three years. On a monthly basis, prices slipped 0.1% after a 0.3% decline in June, with the latest drop driven largely by lower petroleum-related costs.

OCBC said the inflation backdrop remains supportive of a soft franc, noting near-term inflation risks appear limited. The firm also cautioned that any effect from the recent CHF depreciation on imported inflation is unlikely to be felt for at least another two quarters, while pointing to domestic inflation staying subdued and below the midpoint of the SNB’s 0% to 2% price stability range.

FXStreet added that the US dollar is struggling as Federal Reserve rate expectations shift after softer inflation reports, with July headline CPI at 3.4% year-over-year and core CPI at 2.5%, both near market forecasts. Separately, the outlet said escalating US-Iran geopolitical risks have added uncertainty, including threats involving sanctions and disruption of Iranian oil exports, which could help the greenback recover.

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