Dollar drops to low against franc

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There’s not much missing, and the dollar will trade at lower prices than it has since the euro exchange rate base was abolished in January 2015. At that time, a dollar was 86 cents.

One dollar on Friday morning is 0.8878 francs. This means a loss of about 4 percent since the beginning of the year. In November, the world’s leading currency was still trading at slightly over a franc.

On the other hand, the euro performed relatively well against the franc at a current rate of 0.9830. Since the exchange rate drop last summer, the common currency has not lost any further value in the current year.

Frank is actually known for being used as a “safe haven” in uncertain times. But this time it’s different. At this time, the weakness of the dollar is more likely than the strength of the Swiss franc. The dollar tends to be weak against the euro as well. This is confirmed by the fact that a number of US economic data lately tend to be weaker than expected. Weaker economic numbers point to the direction of a weakening economy.

Moreover, unlike the eurozone, inflation in the US has already fallen sharply. Inflation in the US was still 5.0% in March. Due to the weakening economy and falling inflation, investors now assume that the US Federal Reserve will no longer tighten monetary policy any more or less, and therefore the end of rate hikes is near. As a result, rate hike expectations are falling and the dollar is depreciating.

In March, prices increased by 6.9 percent in the euro area and by 7.4 percent in Germany. Inflation in Switzerland is relatively low at 2.9 percent. However, it is still well above the Swiss National Bank’s (SNB) maximum target of 2.0 percent.

While the first rate cuts in the US are already priced in, market participants in the eurozone and Switzerland expect monetary policy to remain restrictive. According to the market, the SNB is likely to raise the key interest rate by another 50 basis points at its next monetary policy assessment in June. And in Euroland, the interest rate cycle is unlikely to end yet.

It is difficult to predict how much the dollar will continue to fall. According to the market, most of the arguments against the dollar are now included in prices. However, the dollar’s recent dips should anticipate much of this.

(SDA)

Source :Blick