AUDCHF Interest Rate Differential and Directional Bias (May 2025)
Reserve Bank of Australia (RBA):
As of March 2025, the RBA cut its cash rate to 4.10% in response to easing inflation and slower growth.
Major Australian banks forecast further cuts, with rates possibly falling to 3.1% by early 2026 if disinflation continues and growth remains sluggish. Cuts are expected to occur steadily, possibly every quarter, starting May 2025.
Swiss National Bank (SNB):
The SNB has cut its key rate to 0.25% as of March 2025, its second cut this year, aiming to support growth amid global uncertainty.
Most analysts expect the SNB to hold rates at this low level for the remainder of 2025, with only a minority predicting a further cut to 0%.
Differential:
The interest rate differential strongly favors the Australian dollar (RBA 4.10% vs. SNB 0.25%), a gap of nearly 4 percentage points.
However, with the RBA expected to cut further and the SNB likely on hold, the differential will narrow over the coming quarters, reducing AUD’s relative yield advantage.
Directional Bias and Technical Outlook
Recent Price Action:
The AUD/CHF exchange rate has been volatile recently and Technical analysis shows a bearish bias
Fundamental Drivers:
Australia: Growth remains sluggish, and the RBA is expected to continue easing, which will pressure the AUD.
Switzerland: The SNB’s dovish stance is already priced in, but global risk aversion and safe-haven flows may continue to support the CHF, especially if geopolitical or trade risks intensify.
Global Sentiment: Uncertainty around global trade and tariffs could further benefit the defensive Swiss franc, while commodity-linked currencies like the AUD may remain under pressure.
Summary Table
Central Bank Policy Rate (May 2025) Outlook Impact on AUDCHF
RBA 4.10% Further cuts expected Bearish for AUD
SNB 0.25% Likely on hold Supportive for CHF
Differential ~+3.85% (AUD over CHF) Narrowing in 2025 Reduces AUD advantage
Conclusion: Directional Bias
Short-term bias: Bearish AUDCHF. Despite a wide rate differential, the narrowing gap (due to RBA cuts) and persistent global risk aversion favor further downside.
Medium-term: If the RBA accelerates cuts and global growth remains uncertain, AUDCHF could remain under pressure, with the CHF supported by its safe-haven status.
In summary: The interest rate differential still favors the AUD, but this advantage is eroding. Economic headwinds and technical signals point to a bearish outlook for AUDCHF in the near term.
Reserve Bank of Australia (RBA):
As of March 2025, the RBA cut its cash rate to 4.10% in response to easing inflation and slower growth.
Major Australian banks forecast further cuts, with rates possibly falling to 3.1% by early 2026 if disinflation continues and growth remains sluggish. Cuts are expected to occur steadily, possibly every quarter, starting May 2025.
Swiss National Bank (SNB):
The SNB has cut its key rate to 0.25% as of March 2025, its second cut this year, aiming to support growth amid global uncertainty.
Most analysts expect the SNB to hold rates at this low level for the remainder of 2025, with only a minority predicting a further cut to 0%.
Differential:
The interest rate differential strongly favors the Australian dollar (RBA 4.10% vs. SNB 0.25%), a gap of nearly 4 percentage points.
However, with the RBA expected to cut further and the SNB likely on hold, the differential will narrow over the coming quarters, reducing AUD’s relative yield advantage.
Directional Bias and Technical Outlook
Recent Price Action:
The AUD/CHF exchange rate has been volatile recently and Technical analysis shows a bearish bias
Fundamental Drivers:
Australia: Growth remains sluggish, and the RBA is expected to continue easing, which will pressure the AUD.
Switzerland: The SNB’s dovish stance is already priced in, but global risk aversion and safe-haven flows may continue to support the CHF, especially if geopolitical or trade risks intensify.
Global Sentiment: Uncertainty around global trade and tariffs could further benefit the defensive Swiss franc, while commodity-linked currencies like the AUD may remain under pressure.
Summary Table
Central Bank Policy Rate (May 2025) Outlook Impact on AUDCHF
RBA 4.10% Further cuts expected Bearish for AUD
SNB 0.25% Likely on hold Supportive for CHF
Differential ~+3.85% (AUD over CHF) Narrowing in 2025 Reduces AUD advantage
Conclusion: Directional Bias
Short-term bias: Bearish AUDCHF. Despite a wide rate differential, the narrowing gap (due to RBA cuts) and persistent global risk aversion favor further downside.
Medium-term: If the RBA accelerates cuts and global growth remains uncertain, AUDCHF could remain under pressure, with the CHF supported by its safe-haven status.
In summary: The interest rate differential still favors the AUD, but this advantage is eroding. Economic headwinds and technical signals point to a bearish outlook for AUDCHF in the near term.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.