CHF Exchange Rate Gains for Second Day in a Row Vs USD

CHF Exchange Rate Gains for Second Day in a Row Vs USD

10 June 2020

Swiss franc’s exchange rate gained for a second day in a row against USD after stock in US tumbled and triggered appetite for safe-haven currencies among investors.

CHF Goes Up

                On Tuesday CHF closed the trading day for a second session in a row with higher exchange rate versus US dollar. The USD went down by 0.8% to 0.9503 francs, whereas earlier in the day it touched the level of 0.9483 francs, the lowest point since middle of March. USD suffered losses after a harsh day on stocks a day after a rally on Nasdaq that hit all-time high, driven by technology companies.  Meanwhile in pair EUR/USD the common currency recovered from losses recorded in the beginning of trading to end the day up 0.4% at 1.1339 dollars. Just day before the euro fell 0.2% to 1.1277 dollars. Generally, the US index measuring its performance against major currencies on Tuesday traded down 0.3% at 96.334.

Yen Also Has a Good Run

                CHF was not the only safe haven currency that has gained, as investors lose the appetite for risk and instead opted to buy Swiss francs or Japanese yen, also considered a safe investment. The dollar fell 0.6%, trading at 107.75 yen, but at some point, during the day, it touched the lowest point in one week with price of 107.63 yen. Analysts claims there can be observed a tendency of interest rates falling and adjusting to ones in Japan, whatever happens next in the global economy in post Covid-19 reality. Also, Japanese investor are eager to sold dollars before the next Federal Reserve announcement on late Wednesday, after two-days meeting, that could include further steps to flatten the yield curve of treasury bonds. The US yield curve in recent session has taken a steep road up with rates increasing on the long end. If Fed decides to stick with its policy of saying no to negative rates and refusing to control yield curve, the US exchange rate might go up.

G10 Currencies Down

                Apart from safe-haven CHF or JPY, most exchange rates of currencies of G10 countries took a tumble on Tuesday. Sentiment for risk has weakened, as analysts expect there might be a second wave of Covid-19 infections. Even though in many countries’ restrictions are eased, there might come this feeling that the pandemic is not over yet, and the virus might linger on for longer or come back with fuller strength in the autumn. At this point market is not pricing these fears well, but the wake-up call might arrive soon, depending on the situation with global infections. For now, investors are more worried about Fed’s announcement.

Other Currencies

                In other news, the Australian dollar exchange rate went down 0.8% versus USD, to 0.6964 dollars, after in early trading, on Asian session touched the 11-month high of 0.7043 dollars. Also, the New Zealand dollar fell against USD by 0.6% to 0.6515 dollars, when earlier it hit the highest point in more than four months. The Norwegian crown decreased 0.9% versus USD to 9.3450 NOK and 0.8% in the exchange rate against the euro to 10.5375 NOK. The Canadian dollar noted price of 1.3457 dollars, down 0.6% against USD.