- The USD/CHF collapses about 0.8550 in the European session on Friday, losing 0.55% in the day.
- Economic uncertainty under Trump’s new tariff policy drives safe refuge flows, supporting the Swiss Franco.
- The Swiss CPI rose 0.3% year -on -year in March, softer than expected.
The USD/CHF torque attracts some sellers around 0.8550 during the European session on Friday, pressured by the weakest US dollar (USD). The Swiss Franco (CHF) gains strength against the dollar in the midst of an increase in the feeling of risk aversion by investors. Investors will be attentive to the US employment data, which will be published later on Friday.
The markets are aimed at safe refuge assets in response to the unexpectedly aggressive tariffs of US President Donald Trump about the main commercial partners. Trump’s reciprocal tariff plans provide a 10% tariff over all US imports except those that comply with the United States-México-Canada agreement. The Trump administration imposed a 31% tax on Swiss imports.
However, concerns about economic slowdown in the United States due to tariff news and the related fall of US actions continue to undermine the USD. The risks to the US economy were also reflected in the increase in bets on the reduction of interest rates of the Federal Reserve (Fed), which could contribute to the weakness of the USD.
Short -term interest rates are now valuing in almost 70% the probabilities of a Fed rates cut at the June meeting, compared to approximately 60% before tariffs were announced, according to the CME Fedwatch tool.
On the Swiss Front, the country’s consumer price index (CPI) rose 0.3% year -on -year in March, compared to an increase of the previous 0.3%, the Swiss Statistics Office reported Thursday. This figure was slightly lower than market forecasts of 0.5%. In monthly terms, the CPI remained stable, in line with consensus and after an increase in February 0.6%. Meanwhile, the CHF has benefited from the enormous uncertainty in the financial markets and ongoing geopolitical tensions.
Franco Swiss faqs
The Swiss Franco (CHF) is the official currency of Switzerland. It is among the ten most negotiated coins worldwide, reaching volumes that far exceed the size of the Swiss economy. Its value is determined by the general feeling of the market, the country’s economic health or the measures taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franco was linked to the euro (EUR). The link was eliminated abruptly, which resulted in an increase of more than 20% in the value of the Franco, which caused a turbulence in the markets. Although the link is no longer in force, the fate of the Swiss Franco tends to be highly correlated with that of the euro due to the high dependence of the Swiss economy of neighboring Eurozone.
The Swiss Franco (CHF) is considered a safe shelter asset, or a currency that investors tend to buy in times in markets. This is due to the perception of Switzerland in the world: a stable economy, a strong export sector, great reserves of the Central Bank or a long -standing political position towards neutrality in global conflicts make the country’s currency a good option for investors fleeing risks. It is likely that turbulent times strengthen the value of the CHF compared to other currencies that are considered more risky to invest.
The Swiss National Bank (BNS) meets four times a year (once each quarter, less than other important central banks) to decide on monetary policy. The bank aspires to an annual inflation rate of less than 2%. When inflation exceeds the objective or it is expected that it will be overcome in the predictable future, the bank will try to control the growth of prices raising its type of reference. The highest interest rates are usually positive for the Swiss Franco (CHF), since they lead to greater returns, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the CHF.
Macroeconomic data published in Switzerland are fundamental to evaluate the state of the economy and can affect the assessment of the Swiss Franco (CHF). The Swiss economy is stable in general terms, but any sudden change in economic growth, inflation, current account or foreign exchange reserves have the potential to trigger movements in the CHF. In general, high economic growth, low unemployment and a high level of trust are good for Chf. On the contrary, if the economic data suggests to a weakening of the impulse, the CHF is likely to depreciate.
As a small and open economy, Switzerland depends largely on the health of the neighboring economies of the Eurozone. The European Union as a whole is the main economic partner of Switzerland and a key political ally, so the stability of macroeconomic and monetary policy in the Eurozone is essential for Switzerland and, therefore, for the Swiss Franco (CHF). With such dependence, some models suggest that the correlation between the fate of the euro (EUR) and the Swiss Franco is greater than 90%, or almost perfect.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
