- You can see that during the trading session on Friday, the US dollar really took off against the Swiss franc as the jobs number in America came out hotter than anticipated.
- This has prompted comparisons between the two economies, with most agreeing that the US is stronger not only than Switzerland but also the surrounding European Union.
- The Swiss send 85% of their exports into the European Union. So as goes Europe, so goes to Switzerland. Furthermore, you also have to keep in mind that recently the Swiss National Bank just cut rates by 50 basis points and are likely to continue cutting. While the Federal Reserve may find itself in a situation where it cannot cut.
Interest Rate and Swap
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If that's going to be the case, people are going to continue to take advantage of this swap. If we can get a break above the 0.92 level, I think that's when you really start to see this thing go much higher. Above 0.92, I'm anticipating that we could go all the way to parity. Granted, that's a longer term move, but that is increasingly what this chart is starting to look like.
Pullbacks to this point in time will continue to attract value hunting, especially if we get anywhere near the 0.91 level, but judging from the Friday action, I think that is probably about as deep of a correction as I would anticipate unless of course something odd happens. The Swiss franc is a safety currency, but so again is the US dollar, so that doesn't have as much of an effect on this USD/CHF pair, which is something that unfortunately a lot of people forget.
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