Strong CHF Exchange Rate as USD Gets Weaker29 July 2021
Safe-haven Swiss franc posted good exchange rate recently as USD got weaker after FED’s comments.
Strong CHF, JPY
On Tuesday two of the most popular safe-haven currencies, Swiss franc and Japanese yen recorded gains, that they held also on Wednesday’s session. Also, the euro was in good position with price of 1.1821 dollars. Combined gains of yen, euro and franc caused distress to USD exchange rate, and index measuring its performance versus other major currencies fell to 92.466 on Wednesday. The US losses trigger the euro’s two-week peak of 1.188 dollars on Thursday.
On Thursday the US dollar slipped further, hitting the one-month low. The bad disposition of USD, which also opened doors for high exchange rates of euro, franc, yen, was cause by US FED’s reassurance that interest rate hike is still distant. This cautious statement gave boost to prices of safe-haven currencies, and also the Chinese yuan and the Australian dollar. Additionally, the USD was taken down by a decrease in real yields, that hit another record low point at the 10-year tenor overnight. This decline of yields also cast a shadow over USD exchange rate long-term perspective and the global economic outlook.
Looking at FED
Investors around the world now will look ahead to the FED’s meeting. After the FED’s meeting in June the US Dollar exchange rate enjoyed a very good run for around month, as FED gave some very gentle stance on rates and monetary policy. Now markets are waiting to see if this month’s meeting will give some more clues on where the policy is heading, especially considering the increase of US inflation rate. There are some hints that FED will end its extraordinary policy support faster than expected, and such move could lift US dollar price and interest rates. Meanwhile another delicate comments from the FED will put pressure on the USD exchange rate, according to analysts. However, many of them don’t expect any radical change in the language of the statement of FED this time around.
In other news around the world, the Chinese yuan rebounded from a three-month low point, after on Tuesday it recorded its worst day since October. But the recovery was modest. Also risks-sensitive New Zealand and Australian dollars didn’t quite rally with investors’ sentiment still being rather cautious. Both Aussie and New Zealand dollars are relying heavily on Chinese and world economic growth. On Wednesday they extended gains, growing more than 0.4%, but the Australian dollar price’s further gains were held back by concerns that the lengthening COVID-19 lockdown in Sydney can hurt the national economy. Meanwhile the Canadian dollar also rose 0.6% to hit two-week high point. The British pound humped above its 20-day moving average overnight as investors reacted to reports that the Great Britain was considering opening borders. GBP hit one-month top recently with 1.3940 dollars.