USD/CHF Slides Toward 0.8050 as Weak US Data Puts Pressure on the Dollar

The Swiss Franc (CHF) strengthened against the US Dollar (USD) on Friday, with the USD/CHF pair easing toward the crucial 0.8050 mark during the American session. The Greenback faced headwinds as a fresh batch of US economic data painted a mixed picture, highlighting slowing consumer demand and reinforcing concerns over the dollar’s near-term vulnerability.

US Retail Sales for July rose 0.5% month-on-month, meeting forecasts but slowing from June’s revised 0.9% gain. On an annual basis, retail growth decelerated to 3.9% from 4.4% in June. The Retail Sales Control Group, which feeds into GDP estimates, increased by just 0.5%, falling short of the 0.8% expected. These figures suggest that household spending growth is losing momentum, even as inflationary pressures remain.

Further complicating the US economic outlook, consumer sentiment showed signs of fragility. The preliminary University of Michigan Consumer Sentiment index dropped to 58.6 in August, well below expectations of 62.0 and marking its lowest reading since May. While the Expectations Index inched higher to 57.2, inflation expectations rose sharply, with the one-year outlook climbing to 4.9% and the five-year outlook to 3.9%. These developments pose a challenge for the Federal Reserve (Fed), which closely monitors long-term expectations as an indicator of price stability.

The mixed signals reinforce a cautious stance for the Fed. Slowing consumer demand and softening sentiment may justify policy easing, but persistent core inflation and the sharp rebound in producer prices leave limited room for aggressive rate cuts. A 25-basis-point cut in September remains the most likely scenario, but expectations of a broader easing cycle have diminished, making the post-September outlook highly data-dependent.

Meanwhile, Swiss economic data revealed a slowdown in growth. Switzerland’s GDP expanded by just 0.1% in Q2, down sharply from 0.8% in Q1, according to the State Secretariat for Economic Affairs (SECO). The deceleration was largely driven by weakening external demand, exacerbated by recent US tariffs on Swiss exports. Domestic activity remained relatively stable, but trade tensions weighed on overall growth. Despite this, the Franc held steady, supported by safe-haven flows and a broadly weaker US Dollar.

Investors will continue monitoring upcoming US data and global trade developments for clues on both the Fed’s policy trajectory and external demand pressures. For now, the USD/CHF pair remains under pressure, reflecting the Greenback’s vulnerability amid softer economic signals and persistent market uncertainty.