- -The recovery of the US dollar stops below 0.8000 in the middle of a cautious mood of the market.
- The uncertainty about the perspectives of global trade is underpinning the Swiss franc of secure refuge,
- The widest bassist trend of the USD/CHF remains at stake with the US dollar depreciating about 6% since mid -May.
The recovery of the US dollar from long -term minimums, at 0.7870, has stagnated on Tuesday just below the psychological level of 0.8000. The torque is quoting with moderate losses on Tuesday, moving around the level of 0.7980, with the Swiss frank of sure shelter backed by the growing uncertainty over global trade.
Trump sent a first lot of tariff cards on Monday, restoring the levels announced on April 2 to Japan and South Korea, among other Asian partners. The US president also delayed the deadline until August 1 and kept the door open to adjustments if a commercial agreement is reached in the interim.
The “firm tariff policy, but not 100% firm”, as described by the US president, highlights the erratic position of the US administration on international trade, and leaves investors wondering what tariffs and from what time they will be implemented, with the appetite due to the moderate risk.
In this context and in the absence of key macroeconomic figures that divert the market approach, secure refuge assets, such as CHF, are maintaining the lead. The USD/CHF is quoting with moderate losses within Monday’s range, with the intact bearish trend, since the torque remains almost 6% below the maximums of mid May and around 12% below so far this year.
Feeling Risk – Frequently Questions
In the world of financial jargon, the two terms “appetite for risk (Risk-on)” and “risk aversion (risk-off)” refers to the level of risk that investors are willing to support during the reference period. In a “Risk-on” market, investors are optimistic about the future and are more willing to buy risk assets. In a “Risk-Off” market, investors begin to “go to the safe” because they are concerned about the future and, therefore, buy less risky assets that are more certain of providing profitability, even if it is relatively modest.
Normally, during periods of “appetite for risk”, stock markets rise, and most raw materials – except gold – are also revalued, since they benefit from positive growth prospects. The currencies of countries that are large exporters of raw materials are strengthened due to the increase in demand, and cryptocurrencies rise. In a market of “risk aversion”, the bonds go up -especially the main bonds of the state -, the gold shines and the refuge currencies such as the Japanese yen, the Swiss Franco and the US dollar benefit.
The Australian dollar (Aud), the Canadian dollar (CAD), the New Zealand dollar (NZD) and the minor currencies, such as the ruble (Rub) and the South African Rand (Tsar), tend to rise in the markets in which there is “appetite for risk.” This is because the economies of these currencies depend largely on exports of raw materials for their growth, and these tend to rise in price during periods of “appetite for risk.” This is because investors foresee a greater demand for raw materials in the future due to the increase in economic activity.
The main currencies that tend to rise during the periods of “risk aversion” are the US dollar (USD), the Japanese yen (JPY) and the Swiss Franco (CHF). The dollar, because it is the world reserve currency and because in times of crisis investors buy American public debt, which is considered safe because it is unlikely that the world’s largest economy between in suspension of payments. The Yen, for the increase in the demand for Japanese state bonds, since a great proportion is in the hands of national investors who probably do not get rid of them, not even in a crisis. The Swiss Franco, because the strict Swiss bank legislation offers investors greater protection of capital.
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.
