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by The Swiss Franc surged to approximately $0.866 (USD/CHF), reaching a level not seen since the start of this year. This increase is primarily driven by the weakening of the US Dollar, causing rising concerns about the strength of the American economy following a lackluster jobs report.
The disappointing employment numbers have fueled speculation that the Federal Reserve might need to cut interest rates three times this year instead of the previously expected two.
USDCHF Fundamental Analysis – 15-August-2024
Economic Uncertainty Drives Investors Toward Safety
The fears of a slowing US economy have led many investors to seek safer assets, contributing to the Franc’s rise. In times of uncertainty, investors typically flock to stable currencies like the Swiss Franc. This “flight-to-safety” strategy indicates growing anxiety over economic stability in global markets, making the Franc an attractive option.
Swiss Inflation Remains Steady, Supporting Rate Cut Expectations
In Switzerland, inflation remained stable at 1.3% in July 2024, aligning with market predictions and maintaining the same level as the previous month. This steady inflation rate strengthens the belief that the Swiss National Bank (SNB) will likely proceed with another interest rate cut in September, marking the third consecutive reduction this year.
- Also read: USD/CNH Analysis – 15-August-2024
Switzerland’s Early Start in Monetary Easing
Notably, the SNB was ahead of many other central banks when it began lowering interest rates earlier this year. It has already reduced borrowing costs twice, diverging from the tightening measures seen globally. The central bank’s proactive approach reflects its focus on supporting economic growth amid broader global uncertainties.
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