- The US dollar recovers its safe refuge status and recovers in general to risk aversion.
- Uncertainty about US commercial tariffs and its deadline keeps investors on alert.
- The minutes of the last meeting of the Fed will probably challenge the recovery of the US dollar later this week.
The US dollar and the Swiss Franco are the best performers among the main currencies on Monday, since investors seek security, anxious that Trump’s tariffs cause a significant interruption in global trade.
However, among them, the dollar shows a slight advantage. The USD/CHF advances at levels just above 0.7970, although even below the psychological level of 0.8000 and less than 100 pips above the minimum of 14 years, at 0.7875, reached last week.
The US president announced during the weekend that he will send letters to some countries specifying the tariffs that will be applied to their products, but did not clarify to which countries or when those taxes will enter into force, since the secretary of the Treasury, Beseent, said an extension of the term, from July 9 to August 1.
The dollar acts as a safe shelter on Monday, but it is not clear if these dynamics will remain. The fears of higher tariffs have hit the US dollar during the previous months, since operators weigh the risks of a negative impact on growth and upward risks of inflation derived from the highest costs of imported products could lead to a context of stagflation.
However, these fears seem to have decreased, at least for now, since a strong report of non -agricultural payrolls from the US published last week restored confidence in the economic impulse of the US and moderated the expectations of an imminent rate cut by the Federal Reserve.
Later this week, the minutes of the last monetary policy meeting of the FED will probably challenge the recovery of the US dollar. Some voices within the committee have been asking for a more lax monetary policy, and the minutes could reflect those discrepancies. If that is the case, they could act as a wind against for the recovery of the USD.
Swiss economy – Frequently asked questions
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.
