Swiss Franc: Weakness Before Resurgence - Commerzbank

Commerzbank FX analyst Michael Pfister noted that as the market gradually prices in Swiss National Bank (SNB) rate hike expectations, the Swiss franc will remain under pressure until 2026, with USD/CHF currently trading around 0.80374.

**Short-Term Pressure Logic**

Pfister believes that market pricing for SNB rate hikes is being progressively pushed back, undermining the franc's interest rate support. Meanwhile, the euro's rebound is also exerting cross-pressure on the franc, with EUR/CHF expected to retain upside room in the coming months. According to Commerzbank, the SNB shows a degree of tolerance for franc weakness, and the transmission effect driven by the euro will cap Swiss inflation upside, providing policy space for the franc's near-term softness.

**Long-Term Revaluation Basis**

Despite near-term pressure, the bank does not see franc weakness as indefinite. Pfister stated that Switzerland's lower inflation and stronger public finances will reinforce the franc's strength later on. Commerzbank's strategy combines verbal intervention with maintaining rate stability, projecting EUR/CHF to trend lower again by 2027, implying the franc will gradually stabilize and recover after 2026.

**Policy and Inflation Balance**

Commerzbank's model shows that the SNB's tolerance for franc weakness partly stems from the euro-driven transmission effect curbing Swiss inflation, thereby reducing the urgency for proactive franc appreciation. Trade dynamics, transmission effects, and rate divergence collectively form the macro backdrop for the current franc softness. Market reports indicate that the SNB's verbal intervention is more about preventing excessive franc depreciation than reversing the overall trend.