USD/CHF declines to near 0.8330 as US Dollar underperforms across the board
- USD/CHF slumps to near 0.8330 as the US Dollar declines on a US downgrade.
- US Hassett assures closing more trade deals this week.
- The SNB is expected to lower interest rates further
The USD/CHF pair trades 0.5% lower to near 0.8330 during North American trading hours on Monday. The Swiss Franc pair weakens as the US Dollar (USD) faces a sharp selling pressure due to erosion in the United States (US) Sovereign Credit Rating.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slumps to near 100.30.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.75% | -0.59% | -0.10% | -0.21% | -0.67% | -0.54% | -0.33% | |
| EUR | 0.75% | -0.09% | 0.47% | 0.37% | -0.02% | 0.04% | 0.20% | |
| GBP | 0.59% | 0.09% | 0.25% | 0.47% | 0.07% | 0.14% | 0.29% | |
| JPY | 0.10% | -0.47% | -0.25% | -0.09% | -0.39% | -0.23% | -0.16% | |
| CAD | 0.21% | -0.37% | -0.47% | 0.09% | -0.45% | -0.33% | -0.17% | |
| AUD | 0.67% | 0.02% | -0.07% | 0.39% | 0.45% | 0.06% | 0.23% | |
| NZD | 0.54% | -0.04% | -0.14% | 0.23% | 0.33% | -0.06% | 0.16% | |
| CHF | 0.33% | -0.20% | -0.29% | 0.16% | 0.17% | -0.23% | -0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
On Friday, Moody’s Rating downgraded the US long-term issuer and senior unsecured ratings from Aaa to Aa1. The one-notch downgrade in the US credit came on the back of a growing $36 trillion debt pile. The US downgrade has sparked yields on interest-bearing assets. 10-year US Treasury yields soar to near 4.52% at the press time, 1.8% higher from its previous close.
Meanwhile, optimism on the White House closing more deals with its trading partners could support the US Dollar. During North American trading hours, the White House’s economic advisor, Kevin Hassett, signaled hopes of more trade deals sooner. “I would not be surprised if there are more trade deals this week,” Hassett.
Additionally, the confidence of investors about a potential US-China trade deal has increased. US President Donald Trump has given a positive response in an interview with Fox News on Friday to visiting China for direct trade talks with Chinese President Xi Jinping.
On the Swiss Franc (CHF) front, investors expect more interest rate cuts from the Swiss National Bank (SNB) due to trade war risk.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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