Dollar Finds a Foothold as Trade Hopes Emerge, but Swiss Franc Holds Firm
April 25, 2025Tariff Headlines Drive Whipsaw Trading
Currency markets swung widely this week: President Trump signaled de-escalation on Tuesday, then Chinese officials asked firms to list products eligible for tariff relief, while insisting no formal talks had occurred. By week’s end, the dollar index was up 0.07 %, trimming part of April’s 4 % drop yet still well below pre-“Liberation Day” levels.
Safe-Haven Pairing: Dollar vs. Swiss Franc
Although the greenback advanced 0.09 % to CHF 0.827, the Swiss franc remains near decade-high strength against the dollar, underlining its role as the premier safe-haven currency. Investors retain sizable CHF positions, reflecting lingering uncertainty over the broader trade narrative and doubts that tariff rollbacks will translate into sustained U.S. growth.
Broad G-10 Moves
USD/JPY: Rebounded 0.67 % to 143.56 as hopes for a BOJ rate hold and calmer trade rhetoric trimmed yen demand. EUR/USD: Slipped 0.11 % to $1.1377, little moved by steady euro-zone data. GBP/USD: Eased to $1.3325 despite upbeat U.K. retail sales, as sterling tracked general dollar firming.
Why Dollar Relief May Be Fleeting
Strategists caution that even partial tariff rollbacks cannot avert the drag on U.S. growth already in the pipeline. MUFG’s Derek Halpenny warns higher market volatility and weaker equities may cap any sustained upside in dollar/yen, while Goldman Sachs’ Jan Hatzius notes foreign investors remain reluctant to expand U.S. exposure—an overhang that could keep the dollar under pressure versus safe havens like the franc.
Looking Ahead: Central Bank Watch
• BOJ (1 May): Widely expected to hold rates; Governor Ueda will focus on tariff fallout before any tightening.
• SNB (June): A stronger franc and sub-1 % inflation argue for an extended pause, though markets price slim odds of another 25-bp cut if deflation risks rise.
• Fed (late May): Investors still see room for an insurance cut should trade optimism fade.
Key Takeaway
While signs of a U.S.–China tariff truce have granted the dollar a brief reprieve, the Swiss franc’s enduring strength underscores persistent market caution—suggesting safe-haven flows may re-emerge at the first hint of renewed trade tension.