Swiss Franc Weakness Tied to Carry and Gold Price
The Swiss Franc (CHF) has been one of the worst-performing global currencies since the Iran shock in February 2026, according to TD Securities strategists.
They attribute its weakness to both low-yield carry dynamics and sensitivity to Gold prices. With the Swiss National Bank (SNB) expected to keep policy on hold, they see global rate paths and commodities as key drivers for CHF crosses.
The SNB's decision to keep the policy rate on hold has allowed macro variables to dictate the direction of EUR/CHF. TD Securities strategists believe that FX carry did not always drive CHF weaker in the past, citing the last global rate hiking cycle of 2022 as an example where CHF rallied due to falling SNB sight deposits.
In their view, falling Gold prices will be a prerequisite for CHF to stay weak. They predict that gold prices could fall to $3,900/oz in the near-term before recovering into a new uptrend. As a result, they forecast EUR/CHF to stay around 0.93 by year-end 2026.