- The USD/CHF attracts some sellers on Thursday in the midst of a modest weakness of the USD.
- Optimism on the commercial agreement between the US and China could limit the CHF and support the torque.
- Operators expect the Swiss/American IPP and the appearance of the president of the FED, Powell, for a new impulse.
The USD/CHF pair struggles to capitalize on the modest profits of the previous day and meets new sales during the Asian session on Thursday. The intra -dialing is sponsored by the appearance of some sales of the US dollar (USD) and drags the countert prices below the level of 0.8400 in the last hour, although it lacks bearish conviction.
The US dollar (USD) lows slightly while the bulls choose to wait for the publication of the US Production Price Index (IPP) and the appearance of the Federal Reserve President (Fed), Jerome Powell, later today. Apart from this, a slight deterioration in the feeling of global risk – as indicated by a generally weaker tone around stock markets – benefits the status of a relative secure refuge of the Swiss Franco (CHF) and exerts some downward pressure on the USD/CHF torque.
However, optimism on the commercial truce between the US and China for 90 days and the decline of a commercial war between the two largest economies in the world maintains a limit to any additional gain for the CHF. In addition, the expectations of less trimming of interest rates by the Fed, in the midst of the decrease in market concerns about a recession in the US, act as a tail wind for the dollar and help limit the fall of the USD/CHF torque, justifying the caution for the bearish operators.
Operators now expect the publication of the Swiss IP in search of short -term opportunities. However, the fundamental background supports the prospects for some purchases at lower levels. Therefore, it will be prudent to expect a strong sales tracking below the area of ​​0.8325, or the minimum of the previous night, before confirming that the recent recovery from the area of ​​0.8040, or the lowest level since August 2011, has run out of boost.
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.
