Flare-up in Europe fuelled safe-haven demand on Friday that put the Swiss franc on course for its first weekly rise in two months. Europe’s gas prices hit a one-year high due to a decrease in storage.

But Swiss inflation in October dropped to 0.6%, its lowest level since June 2021, stoking analyst expectations the SNB will press ahead with further rate cuts. The central bank has lowered rates three times this year.

Switzerland could be at risk of slipping into deflationary territory next year, as a stronger Swiss franc against the euro beleaguers policymakers’ efforts to get a handle on price growth.

The economy grew by 0.2% in Q3, marking a slowdown from the 0.5% growth recorded in the previous quarter. On the positive side, it is less affected by gas market volatility as most of its power comes from renewables.

Data overnight showed US initial jobless claims unexpectedly dropped to a seven-month low last week but also indicated some slack as it is taking longer for the unemployed to find new jobs.

Expectations for loosening have been scaled back recently. Markets are pricing in a 57.8% chance of a 25-basis-point cut at the Fed's December meeting, down from 72.2% a week ago, according to CME's FedWatch Tool.

The dollar traded above 200 SMA – a potential support – against the Swiss franc. Unless breaking below the level, it could keep rising towards 0.8920. 

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