- The USD/CHF remains close to the 0.8099 – his lowest level as of September 2011.
- The US dollar remains under pressure while the uncertainty of investors persists amid the unpredictable trajectory of US commercial and economic policy.
- The Swiss Franco has been appreciated due to the demand for safe refuge amid the growing global commercial tensions.
The USD/CHF pair is trying to recover from the recent losses recorded in the previous session, quoting around 0.8160 during the Asian hours of Thursday. However, it remains close to the mark of 0.8099 – his lowest level since September 2011, reached on April 11.
The US dollar (USD) continues to face winds against as the uncertainty of investors persists due to the unpredictable nature of the US commercial and economic policy in contrast, the Swiss Franco (CHF) is backed by safe refuge flows, which further presses the USD/CHF torque.
Tensions have climbed after US President Donald Trump launched an investigation into possible key mineral tariffs, expanding the commercial dispute with China. Research includes critical sectors such as copper, pharmaceutical products, wood and semiconductors, underlining concerns about the limited national production of the United States in these industries.
Despite the general weakness of the dollar, the dollar index (DXY) is slightly firmer, quoting about 99.60, backed by solid consumer spending data. The US retail sales increased 1.4% in March, exceeding both the increase of 0.2% in February and market expectations of an increase of 1.3%, according to data published on Wednesday. The operators now focus their attention on the next US data launches, including construction permits, the beginnings of homes, the manufacturing index of the Fed of Philadelphia and the initial applications of weekly unemployment subsidy.
Since the announcement of tariffs on April 2, the Swiss Franco (CHF) has appreciated more than 7%, emerging as one of the strongest main currencies. Investors are increasingly resorting to Franco as an active safe refuge amid the growing global commercial tensions and the US erratic policy signs.
Meanwhile, the strong appreciation of the CHF has fed deflationary pressures in Switzerland, which has led to the speculation that the Swiss National Bank (SNB) could reconsider the idea of ​​reintroducing negative interest rates. Although SNB has a history of intervening to stop the Frankish strength, it is now acting more cautiously to avoid attracting Washington’s criticism.
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.
