TD Securities strategists argue that the Swiss Franc’s (CHF) underperformance since the February 2026 Iran shock reflects both low-yield carry dynamics and sensitivity to Gold prices.
With the Swiss National Bank (SNB) expected to keep policy on hold and sight deposits muted, they see global rate paths and commodities as key drivers for Swiss Franc (CHF) crosses, limiting further sustained CHF weakness
SNB on hold leaves CHF to globals “Since the Iran shock at the end of February 2026, CHF has become one of the worst-performing global currencies along with SEK. Risk-off sentiment only supported CHF briefly in the first half of March, before a downtrend ensued.” “CHF has always been a low-yielding currency, but FX carry did not always drive CHF weaker. In fact, during the last global rate hiking cycle of 2022, when rate differential widened in favor of global currencies against CHF, CHF broadly rallied on the back of falling SNB sight deposits.
Sight deposits have shown a muted change in 2026, which has allowed macro variables to dictate the direction of EUR/CHF. With the SNB likely to keep the policy rate on hold in the foreseeable future, rate paths for global central banks will matter more for CHF-crosses.” “CHF has been one of the worst-performing global currencies since the Iran shock in 2026. While CHF bears have been awakened with FX market participants largely attributing CHF weakness to carry, we find falling gold price also matters.