- The USD/CHF struggles to consolidate the positive movement of Monday towards a maximum of a week.
- The nerves for tariffs weigh on the feeling of investors and benefit the Chf of safe refuge.
- The appearance of new sales of USD exerts even more pressure on cash prices.
The USD/ChF pair attracts new sellers during the Asian session on Tuesday and reverses part of the strong upward movement of the previous day towards a maximum of a week, around the 0.8000 psychological brand. Cash prices fall to the 0.7960 area, or a new minimum in the last hour amid a combination of negative factors.
The feeling of global risk is affected after new concerns about the commercial tariffs of US President Donald Trump. In fact, Trump published the first lot of letters that delineate higher tariffs against a series of important economies and also threatened that any country that aligns with BRICS anti -American policies will be taxed with an additional 10%tariff. This, in turn, moderates the appetite of investors by higher risk assets and benefits the status of safe refuge of the Swiss Franco (CHF), which, together with the appearance of some US dollar sales (USD), exerts downward pressure on the USD/CHF torque.
In the context of US tax concerns, fears about the possible economic repercussions of Trump’s commercial tariffs fail to help USD consolidate the positive movement of Monday. However, the fall of the USD seems limited amid the expectations that the Federal Reserve will maintain high interest rates in advance of inflation worsening as a result of the highest imports to imports and an still resistant US labor market. This could dissuade the operators to carry out aggressive bomberies around the USD/CHF torque and help limit losses in the absence of any relevant economic publication.
Meanwhile, the market approach remains focused on the minutes of the FOMC meeting, which will be published on Wednesday. Market participants will look for clues on the Fed feature cuts path, which, in turn, will play a key role in the influence of short -term USD price dynamics. Apart from this, the deepest feeling of risk should influence the CHF of safe refuge and contribute to providing a significant impulse to the USD/CHF torque.
Swiss Franco – Frequently Questions
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.
