- The USD/ChF weakens around 0.8840 in the early European session on Tuesday.
- The wave of uncertainty around the next American tariffs weighs on the US dollar.
- Swiss real retailers increased 1.6% year -on -year in February, more than expected.
The USD/CHF pair softens about 0.8840 during the early European session on Tuesday. The US dollar (USD) goes back in front of the Swiss Franco (CHF) as the operators become reluctant to risk against US commercial tariffs that are expected to be announced on Wednesday.
Several administration officials Trump suggested that reciprocal tariffs would focus on a handful of countries that have large commercial imbalances with the USA. The lack of early clarity on commercial policy, together with the potential economic impact of another round of broad tariffs, could undermine the dollar in the short term.
The data published by the Federal Office of Swiss Statistics on Tuesday showed that the country’s real retail sales increased 1.6% year -on -year in February, compared to an increase of 2.9% in January (reviewed from 1.3%). This reading was stronger than the 1.5%expectation. The Swiss Franco remains firm in immediate reaction to the optimistic Swiss economic data.
Meanwhile, global uncertainties and persistent geopolitical tensions could promote flows to safe shelters, benefiting the CHF. Trump also threatened Iran during the weekend with bombings and secondary tariffs if Tehran did not reach an agreement with Washington on his nuclear program. Iranian officials warn against any military adventurism and will respond quickly and decisively to any act of aggression or attack by the US or their attorney, against their sovereignty, territorial integrity or national interests.
Franco Swiss faqs
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 Although the link is no longer in force, the fate of the Swiss Franco tends to be highly correlated with that of the euro due to the high dependence of the Swiss economy of neighboring Eurozone.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.
