- The US dollar goes from 0.7980 and remains caught within the range of the last two weeks.
- The new Trump tariff assault harmed the appetite for risk and is supporting the demand for safe shelters, such as Chf.
- The strong unemployment requests in the US have stopped the hopes of imminent fed cuts, providing some support to the USD.
The US dollar is cutting profits against the Swiss Franco, Seguro Refugio, on Friday, since the growing uncertainty about global trade and investor concerns on the impact of the highest tariffs on the US economy have crushed the appetite for risk.
The dollar rebound from Thursday at 0.7920 has been limited in the area of ​​0.7980-0.7990 on Friday, which leaves the torque operating laterally within a 100 pip range below the psychological level of 0.8000.
The president of the USA, Trump, shook the markets late on Wednesday, introducing tariffs of 35% to Canada and announcing a new round of encumbrances to commercial partners, including the EU, which is currently in commercial negotiations with US representatives.
Apart from that, Trump said that general tariffs will increase to 15% or 20% from the previous 10% rate. Market concerns about the impact of the highest tariffs on the perspectives of global trade have hit the appetite for risk, increasing the demand for safe shelters, such as the Swiss Franco.
In the US, Fed officials have illustrated the divergence within the committee, with Waller and Daly reiterating their call to trimmed of interest rates in the coming months, while Mussalem maintained a more cautious vision, observing that it is still early to evaluate the impact of interest rates.
The data published on Thursday supported the aggressive position of the Federal Reserve, since the unexpected decrease in weekly unemployment applications confirms the resilient labor market and cuts the hopes of imminent feats of fees.
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.
