- The United states dollar continues to find support against the Swiss franc, despite the fact that the PPI numbers in the early hours on Thursday were complete miss.
- While traders may have initially tried to price in the idea of rate cuts coming out of the Federal Reserve, it does not look like it is going to happen very quickly.
- On the other side of the equation you have the Swiss National Bank which has already cut interest rates, as Switzerland has to deal with a slowing European economy.
Further adding pressure to the Swiss franc is the fact that the European Central Bank has already cut rates, suggesting that perhaps the Europeans are worried about the economic situation on the continent.
Safety currencies
Both the US dollar and the Swiss franc are considered to be safety currencies, which has a lot to do with why the USD/CHF pair typically doesn't move that quickly. However, we are also near the 0.90 level, a psychologically important figure that a lot of people will be paying attention to. If we can break above this level, then I suspect that the US dollar can run toward the 0.92 Swiss franc level, where it has seen trouble in the past.
That being said, you should keep in mind that the war in Ukraine could have money flowing into North America much quicker than it will Switzerland, despite the fact that Switzerland is obviously a safe destination for banking. While the latest economic numbers in the United states have been a bit disappointing, this is a relatively new phenomenon, and we have seen economic numbers disappoint in the past only to see growth start right back up.
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It might also be worth noting that it's an election year and therefore the Federal Reserve won't be likely to cut rates much, so that they are not seen to be trying to influence the election. Interest rates in the United states are high enough that a single cut wouldn't do much anyway, and there's not much time to do more than that between now and the election. With that, the US dollar should continue to be somewhat buoyant against the Swiss franc going forward.
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