- USD/ChF moves a little as merchants wait for economic issues that seek to obtain a new payment force.
- The gross local product of the United States (Q4) can report 2.6 % growth, down from the previous 3.1 %.
- The Swiss trade balance and the pioneering KOF index will be issued on Thursday.
The USD/CHF stability after two consecutive days of gains, trading about 0.9070 during the Asian session on Thursday. This decline is mainly attributed to the USA’s weaker dollar. The US dollar index (DXY), which tracks Greenback against six major currencies, hovers slightly less than 108.00 marks at the time of writing this report.
Traders are awaiting the issuance of the GDP growth data for the fourth quarter in the United States, to be held on Thursday. The market consensus is expected to slow down the growth of the annual gross domestic product, with 2.6 % expectations, a decrease from the previous 3.1 %. Ability concerns continue, as the Q4 GDP index is expected to increase to 2.5 %, up from 1.9 %.
The negative aspect of the US dollar/CHF may be limited, as the US dollar can enhance after the cautious approach to the Federal Reserve (Fed) in monetary policy. The Federal Reserve maintained the borrowing rate during the night at 4.25 % -4.50 % during its meeting in January on Wednesday, and was widely expected. This decision follows three consecutive price discounts since September 2024, as a total decrease in one point.
The increasing federal reserve bank has been strengthened by its decision to remove the language that indicates confidence in inflation to its target by 2 %. Federal Reserve Chairman Jerome Powell confirmed at the press conference that the central bank will require “real progress in inflation or some weakness in the labor market” before considering any changes in politics.
In Switzerland, the ZEW survey forecast for January increased to 17.7, reflecting the decrease in the previous month to -20, according to the data issued on Wednesday. Traders are also waiting for the Swiss trade balance for December and the pioneering KOF index, both of which are scheduled to be released on Thursday.
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.