- The US dollar remains limited below 0.8000 near minimum of 14 years.
- The hopes of commercial agreements and the renewed concerns about the US debt are weighing on the USD.
- The KOF business barometer reflects a deteriorated economic perspective in Switzerland.
The US dollar cannot be significantly distancing from the long -term minimum last week in the 0.7960 area, since the torque remained limited below 0.8000 on Monday, with the hopes of commercial agreements and the resurgence of fears on the fiscal health of the USA.
The news that US and China have reached an agreement on the key issue of rare earths and the resumption of negotiations with Canada, which broke on Friday, have improved the feeling of investors on Monday.
In addition, the US Treasury Secretary, Scott Besent, suggested an extension of the deadline of July 9 to September 1. This provides an additional margin to the US and its main commercial partners to reach significant agreements and has contributed to raising the mood of investors on Monday, keeping the USD rise attempts limited.
Apart from that, the broad fiscal bill of the US, which is expected to join between 3,000 and 4,000 million dollars to a bulky debt of the US government, is advancing through the Senate. This bill has increased concerns about a debt crisis in the US and is likely to be an additional source of negative pressure for the USD.
In Switzerland, the advanced Kof indicator deteriorated to 96.1 in June from 98.6 in May, in the face of the expectations of an improvement at 99.3. The study warns of a particular downward trend in the general business situation and foresees a deteriorated economic perspective. However, the negative impact on the Swiss Franco has been contained.
Swiss economy FAQS
Switzerland is the largest economy in the European continent in terms of gross domestic (GDP) nominal. If measured by GDP per capita (a wide measure of the average standard of living), the country is among the highest in the world, which means that it is one of the richest countries in the world. Switzerland tends to be in the first places of world classifications on standard of living, development, competitiveness or innovation rates.
Switzerland is an open and free market economy based mainly on the services sector. The Swiss economy has a strong export sector and the neighboring European Union (EU) is its main commercial partner. Switzerland is an important watches exporter and houses important companies in food, chemistry and pharmaceutical industries. The country is considered an international fiscal paradise, with corporate tax rates and significantly low income compared to its European neighbors.
As a country of high income, the growth rate of the Swiss economy has decreased in recent decades. Even so, its political and economic stability, its high levels of education, top -level companies in various industries and their fiscal paradise status have made it a preferred destination for foreign investment. This has generally benefited the Swiss Franco (CHF), which has historically remained relatively strong in front of its main monetary pairs. In general, a good performance of the Swiss economy – based on high growth, under unemployment and stable prices – tends to appreciate the CHF. On the contrary, if the economic data suggests to a weakening of the impulse, the CHF is likely to depreciate.
Switzerland is not an exporter of raw materials, so, in general, their prices are not a key factor for the Swiss Franco (CHF). However, there is a slight correlation with gold and oil prices. In the case of gold, the condition of the CHF as an active refuge and the fact that the currency used to be backed by the precious metal means that both assets tend to move in the same direction. In the case of oil, a document published by the Swiss National Bank (SNB) suggests that the increase in oil prices could negatively influence the assessment of the CHF, since Switzerland is a net fuel importer.
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.
