- USD/CHF weakens approximately 0.8845 in the early European session on Monday, losing 0.17 % a day.
- Economic uncertainty and geopolitical risk enhance safe flows, supporting the Swiss franc.
- The Federal Reserve is expected to maintain the standard federal funds rate in the range of 4.25 % to 4.5 % on Wednesday.
The USD/CHF pair attracts some sellers to about 0.8845 during the early European session on Monday. The underestimated trade policy by US President Donald Trump and a series of weak American economic data weighs the US dollar (USD) against the Swiss franc (CHF). Later on Monday, retail sales data will be published in February.
Optimism that the Trump administration will enhance the economy turns into fears that its commercial policies may stagnate. The data issued on Friday indicated that the index of consumer feelings in the United States fell to its lowest level by about 2-1/years in March, but inflation expectations rose amid concerns about the effect of Trump’s sweeping tariff, which sparked a global trade war.
The US Secretary of Defense said on Sunday that the United States will continue to attack the Yemeni Houthis until they stop the attacks on the shipment, as the group threatened to align in Iran to escalate in response to the deadly American strikes the previous day.
The escalating trade war between the United States and many of its main commercial partners, fears of influencing economies around the world and increasing geopolitical tensions in the Middle East can enhance CHF, a safe extract currency and serve as a winding wind.
The Federal Reserve (Fed) is widely expected to maintain the interest rate at its meeting in March on Wednesday. Federal Reserve officials, including the President of the Federal Reserve, Jerome Powell, confirmed that they are following the waiting and vision of interest rates because many economic policies are in the air. The price of investors in discounts in the price of a quarter this year starting from June or July, with a high possibility for the third by the end of the year. However, any sudden comments from policy makers at the Federal Reserve can raise greenery in the short term.
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.
