- The USD/CHF moves up to around 0.8145 in the early Asian session on Friday, rising 0.22% in the day.
- Trump imposed a tariff rate of 39%.
- The operators will closely observe the US US Employment Report, which will be published later on Friday.
The USD/CHF pair gains strength to about 0.8145 during the early Asian session on Friday. The Swiss Franco (CHF) weakens against the US dollar (USD) after the US president Donald Trump established a 39% tariff on Switzerland’s assets. All eyes will be placed in the US Employment Report of July, which will be published later on Friday.
The White House declared late on Thursday that Trump will keep the minimum global tariff rates in 10%, resisting previous suggestions that could raise the threshold to 15% or more. However, Trump has hit Switzerland with a tariff rate of 39%. The CHF is yielding below its G-10 peers after a surprisingly high tariff rate was imposed on Switzerland.
The Federal Reserve of the USA The president of the FED, Jerome Powell, declared during the press conference that the Central Bank of the United States. “Has not made decisions” about a possible policy change in September and can have been evaluating the effect of tariffs on consumer prices.
The operators will closely follow the publication of US employment data for July later on Friday. The US economy is expected to add 110,000 jobs in July, while it is projected that the unemployment rate will increase to 4.2% from 4.1% during the same period.
In addition, it is estimated that the average income per hour in the US increases 3.8% year -on -year in July from 3.7% in the previous reading. If the reports show weaker results than expected, this could weigh on the USD and act as a wind against the pair.
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 Although the link is no longer in force, the fate of the Swiss Franco tends to be highly correlated with that of the euro due to the high dependence of the Swiss economy of neighboring Eurozone.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.
