- The USD/CHF earns traction around 0.8825 in the early European session on Friday.
- The US economy grew at an annual rate of 2.4% in the last three months of 2024.
- The February PCE inflation report will be the culminating point later on Friday.
The USD/CHF pair quotes in positive territory about 0.8825 during the early European session on Friday. The US dollar advances as the operators evaluate how severe are the tariffs that will be revealed next week by the US president, Donald Trump, and how it is likely to impact the global economy. FEBRUARY PERSONAL CONSUMPTION DATA (PCE) will be at the Center for Care later on Friday.
The growing optimism that Trump will be flexible in determining tariffs could boost the feeling of risk and the US dollar (USD). Trump declared on Monday that cars tariffs will be implemented soon, but not all their threatening tariffs would apply on April 2 and some nations could receive exemptions. However, any rising commercial tensions could support the Swiss Franco (CHF), the safe refuge coin, and act as a wind against for the pair.
The third publication of the figures of the Office of Economic Analysis on Thursday showed that the US economy grew at an annual rate of 2.4% in the last three months of 2024. This figure was slightly better than the previous estimate of the growth of the fourth quarter.
The operators will take more clues of the US PCE inflation data that will be published on Friday. Lower inflation would allow the Federal Reserve (FED) to cut interest rates. The US Central Bank cut the rates at the end of last year, but maintained its stable reference interest rate at the March meeting due to concerns that Trump’s policy to increase tariffs could rekindle high inflation.
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 Although the link is no longer in force, the fate of the Swiss Franco tends to be highly correlated with that of the euro due to the high dependence of the Swiss economy of neighboring Eurozone.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.
