- USD/CHF extends to its decline as the US dollar weakens amid escalating concerns about the potential economic impact of the definitions imposed by the United States.
- DXY has decreased more than 1 %, while the return on US Treasury bonds also decreased by more than 1 %.
- The Swiss franc acquires strength as commercial tensions between the United States of Chinese intensify concerns and enhance the demand for safe assets.
The USD/CHF pair fell to 0.8069 during the Asian session on Monday, which represents its lowest level since September 2011, and it is circulated around 0.8090. The US dollar (USD) remains under pressure, and is weighted by increasing fears of economic repercussions of the recent American definitions.
The US dollar index (DXY), which tracks Greenback against a basket of six main currencies, has decreased more than 1 % to about 98.30-weakest level since April 2022. In addition to pressure, the return on US Treasury bonds has slipped for more than 1 %, now hovering by 3.75 %.
Jerome Powell, President of the Federal Reserve, warned that the combination of slow economy and continuous inflation could challenge the goals of the Federal Reserve and increase the risk of stagnation. Political tension adds another layer of uncertainty, as reports on Thursday indicate that President Trump’s increasing satisfaction with Powell, even thinking about removing him. While the markets showed little of the initial reaction, White House economic advisor Kevin Haysit confirmed that the option is being explored.
Swiss markets are closed to spend the Easter vacation. However, the Swiss franc (CHF) may enhance the high emerging trade tensions in the United States of China and increase the recession fears and pay the demand for safe assets. Meanwhile, President Trump exempt the main technical products – the manufactured gland in China – from the proposed mutual definitions.
Despite this, tensions are still. The White House imposed a new tariff on Chinese ships to do the American ports, which may disrupt the global shipping corridors. However, Trump hit a more reconciliation tone late Thursday, noting that China has made many concessions and has been optimistic about reaching a commercial deal within three to four weeks. He said, “I do not want to go up on China’s tariff,” he said. “If the Chinese definitions rise, people will not buy.”
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.
