- The USD/ChF weakens about 0.8825 in the early European session on Thursday.
- Investors fear that the commercial war affects the growth of the US, weighing on the US dollar.
- The economic perspectives are more uncertain, said the quarterly SNB bulletin.
The USD/ChF pair quotes in a weaker tone around 0.8825 during the early European session on Thursday. Concerns about a global commercial war and the in progress geopolitical tensions drive safe refuge assets such as the Swiss Franco (CHF). Investors expect the final reading of the Gross Domestic Product (GDP) for the fourth quarter (Q4), the initial weekly applications of unemployment subsidy and the sales of pending housing, which will be published later on Thursday.
The uncertainty about the tariff perspectives and the fears that the commercial policies of US President Donald Trump slow the global economy and affect corporate profits undermine the dollar against CHF. Trump declared on Monday that cars will be implemented shortly, but not all of his threatening tariffs would apply on April 2 and some nations could receive exemptions. He also imposed 25% secondary tariffs on any nation that bought oil or gas from Venezuela.
Investors will closely monitor reciprocal tariffs that will be announced next week. Trump hinted that the measures may not be the equivalent tariffs he has promised to impose. Any positive development around commercial policies could raise the US dollar (USD) in the short term.
The Swiss National Bank (SNB) warned in its quarterly bulletin published on Wednesday that the economic prospects for Switzerland and the rest of the world have become “considerably more uncertain” due to the in progress geopolitical risks worldwide, as well as tariff threats by Trump.
The SNB recognized that the CHF depreciated in front of the euro and the dollar after the reduction of interest rates of December. The Swiss Central Bank promised to “use additional monetary policy measures to influence the exchange rate or interest rates,” if necessary.
Swiss economy FAQS
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.
