USD/CHF trades sideways around 0.7980 as investors struggle to gauge US economic outlook
- USD/CHF wobbles around 0.7980 on halt of key US economic releases.
- The US ADP Employment data for September signaled a slow down in the job market.
- Inflation in the Swiss economy continues to remain lower.
The USD/CHF pair trades in a tight range around 0.7980 during the late Asian trading session on Friday. The Swiss Franc consolidates as financial market participants struggle to gauge the United States (US) economic outlook, with halt in key economic releases in the wake of the partial government shutdown.
During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, oscillates inside Thursday’s trading range around 97.90.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.00% | -0.02% | 0.27% | -0.01% | 0.04% | -0.01% | 0.01% | |
| EUR | 0.00% | 0.05% | 0.26% | 0.01% | 0.06% | -0.01% | 0.02% | |
| GBP | 0.02% | -0.05% | 0.28% | -0.06% | 0.01% | -0.06% | -0.03% | |
| JPY | -0.27% | -0.26% | -0.28% | -0.28% | -0.23% | -0.29% | -0.28% | |
| CAD | 0.01% | -0.01% | 0.06% | 0.28% | 0.08% | 0.00% | 0.03% | |
| AUD | -0.04% | -0.06% | -0.01% | 0.23% | -0.08% | -0.07% | -0.06% | |
| NZD | 0.01% | 0.00% | 0.06% | 0.29% | -0.00% | 0.07% | 0.02% | |
| CHF | -0.01% | -0.02% | 0.03% | 0.28% | -0.03% | 0.06% | -0.02% |
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 Tuesday midnight, the US government was forced to announce a partial closure after Republican Senators failed to persuade Democrats to support the short-term funding bill.
Key economic releases, such as Nonfarm Payrolls (NFP) for September and the Initial Jobless Claims for the week ending September 27 have not been published by their respective agencies, while investors were waiting for their release to get fresh cues on the current status of the US labor market.
Meanwhile, the US ADP Employment Change data for September has signaled signs of worsening job market. On Wednesday, the US ADP Employment report showed that the private sector laborforce witnessed reduction of 32K employees in September. Economists had anticipated that 50K fresh workers were added in that period. Additionally, the report revealed that 3K employees were laid off in August against fresh addition of 54K workers.
In the Swiss region, inflationary pressures continue to remain soft in September amid slower economic growth. The Consumer Price Index (CPI) data showed on Thursday that price pressures deflated expectedly by 0.2% on a monthly basis, faster than 0.1% in August. Year-on-year CPI rose steadily by 0.2%, slower than estimates of 0.3%.
Last week, Swiss National Bank (SNB) Chairman Martin Schlegel expressed confidence post interest rate announcement that price pressures could “accelerate” in coming quarters.
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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