The Swiss franc is down slightly on Wednesday. In the North American session, USD/CHF is trading at 0.8964, up 0.14%.
Will Swiss franc stay below 90 level?
The US dollar has been struggling in recent weeks and the major currencies continue to make inroads against the greenback. The Swiss franc has soared since April 1, with USD/CHF falling 4.96 per cent in that period. The pair broke below the symbolic 90-level last week and touched a low of 0.8930 on Wednesday, its lowest level since mid-February.
Policymakers of the Swiss National Bank are undoubtedly concerned with the sharp appreciation of the Swiss franc. A key role of the central bank is to curb the Swiss franc’s value in order to keep Swiss exports competitive. This involves significant purchases of US dollars, to such an extent that the US Treasury Department labeled Switzerland a currency manipulator in 2o20. With the US dollar showing prolonged weakness and the Federal Reserve insisting that it will not tighten policy anytime soon, the SNB may have a tough time trying to prevent the Swissie from appreciating further.
With the vaccine rollout in full swing, Covid rates have been falling and the Swiss government has been reopening the economy. Credit Suisse Economic Expectations, which gauges the views of financial experts about the economy accelerated for a fourth straight month in April. The indicator rose to 72.2, up from 68.3 beforehand, indicative of improving conditions. The index has rebounded in impressive fashion since a disastrous reading of -45.8 in February 202o, at the start of the Covid pandemic. With the global economy slowly finding its footing, demand for Swiss exports should continue to increase and boost Switzerland’s economy.
- USD/CHF faces resistance at 0.9033 and 0.9087
- On the downside, there is weak support at 0.8939. Below, there is support at 0.8899