- USD/CHF weakens about 0.8840 in the early European session on Tuesday.
- The cycle of uncertainty surrounding the upcoming American definitions weighs the US dollar.
- The real Swiss retail sales increased by 1.6 % on an annual basis in February, that is, stronger than expected.
The USD/CHF pair reduces approximately 0.8840 during the early European session on Tuesday. The US dollar edges (USD) are lower against the Swiss franc (CHF) as traders grow from risk before the US trade tariffs are revealed on Wednesday.
Many Trump administration officials have suggested that mutual definitions focus on a handful of countries that have major commercial imbalances with the United States. However, US President Donald Trump said that the “mutual definitions” plan will target all other countries when it is revealed on Wednesday. The lack of prior clarity in commercial policy, as well as the potential economic impact of another round of comprehensive definitions, can undermine the green back in the short term.
Data issued by the Swiss Federal Statistical Office on Tuesday showed that real retail sales in the country increased by 1.6 % on an annual basis in February, compared to an increase of 2.9 % in January (it was revised from 1.3 %). This reading came stronger than expecting 1.5 %. The Swiss franc remains firm in an immediate reaction to the optimistic Swiss economic data.
Meanwhile, universal uncertainty and continuous geopolitical tensions can enhance safe infiltration flows, which benefit from the Chif. Trump also threatened Iran during the weekend with bombing and secondary definitions if Tehran did not reach an agreement with Washington on its nuclear program. Iranian officials warn of any military adventure and will respond quickly and decisively to any aggressive action or attack by the United States or its agent, against its sovereignty, regional safety or national interests.
Swiss Frank questions and answers
The Swiss franc (CHF) is the official currency in Switzerland. It is among the ten best trading currencies in the world, as it reaches folders that exceed the size of the Swiss economy. Its value is determined by the broad market morale, economic health in the country or the work taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss franc was linked to the euro (euro). The wedge was suddenly removed, which led to an increase of more than 20 % in the value of the franc, causing disturbance in the market. Although PEG is no longer in effect anymore, the CHF fortunes tend to be largely linked to the euro due to the high dependency of the Swiss economy on the neighboring euro area.
The Swiss franc (CHF) is one of the safe assets, or a currency that investors tend to buy in the market pressure times. This is due to the visualization of Switzerland in the world: the stable economy, the strong export sector, the large central bank reserves, or a long -term political position towards neutrality in global conflicts, making the country a good option for investors who flee the risks. Disputed times are likely to enhance the value of hyperactivity against other currencies that are seen as more dangerous to invest in it.
The Swiss National Bank (SNB) meets four times a year – every quarter, less than other major central banks – to make a decision on monetary policy. The bank aims to an annual inflation rate less than 2 %. When inflation is higher than the goal or is expected to be higher than in the foreseeable future, the bank will try to tame the price growth by raising the policy price. The highest interest rates are generally positive for the Swiss franc (CHF) because it leads to high returns, making the country a more attractive place for investors. On the contrary, low interest rates tend to weaken CHF.
Switzerland’s macroeconomic versions in Switzerland are the key to assessing the state of the economy and can affect the evaluation of the Swiss Frank (CHF). The Swiss economy is widely stable, but any sudden change in economic growth, inflation, current account, or central bank’s currency reserves have the ability to run moves in CHF. In general, high economic growth, low unemployment and high confidence are good for Chif. On the contrary, if economic data indicates poor momentum, CHF is likely to decrease.
As a small and open economy, Switzerland relies heavily on the health of the neighboring eurozone economies. The broader European Union is a major economic partner in Switzerland and a major political ally, so the stability of macroeconomic and monetary policy in the eurozone is essential for Switzerland, and therefore, for the Swiss franc (CHF). With this dependency, some models indicate that the relationship between the euro wealth (EUR) and the CHF is more than 90 %, or close to perfection.
