- The USD/CHF slumps up to close to 0.8230 while the US dollar expands the initial losses despite the release of Upbeat US NFP data for April.
- US President Trump insisted that he was fed in the decline of interest rates through a reality post.Social.
- Investors are waiting for Swiss CPI data for April, which will be released on Monday.
The USD/CHF pair was less around 0.8230 in the North American session on Friday. The Swiss Franc pair weakened as the US dollar expanded the correction after the release of US (US) Nonfarm Payrolls (NFP) data for April. The US Dollar Index (DXY), which monitors the value of the greenback against six major currencies, falls up to close to 99.40.
The initial reaction from the US dollar was positive after the release of the official US job data, which came better than expected. Technically, the US dollar should be attractive to many bids as the increasing work data limits the scope of the Federal Reserve (FED) erasing policy. However, it was still slipping as US President Donald Trump insisted that the Fed should lower interest rates.
The NFP report showed that the economy had added 177K fresh workers, which was higher than the 130k estimates, but slightly lower than the March reading of 185K. The unemployment rate remained stable at 4.2%, as expected.
The president of the United States is stated by a post on reality.Social that there are many compelling reasons for the Fed to start reducing interest rates. “The fuel has just ruined $ 1.98 a gallon, the lowest of the years, groceries (and eggs!) Down, energy down, mortgage rates down, work strong, and better news, while billions of dollars will be poured out !!!
In mid -April, Donald Trump criticized Fed Chair Jerome Powell for not decreasing interest rates and warned that the economy could face a collapse if they were not reduced immediately. Investors have seen the event as an attack on Fed's autonomy, which led to a sharp decline in the US dollar, along with investors doubting its safe status.
Meanwhile, the Swiss Franc (CHF) shows a mix of performance against its peers leading the Swiss Consumer Price Index (CPI) data for April, which will be released on Monday. The month-to-month Swiss CPI is estimated to grow 0.2% after the remaining flat in March.
US Dollar FAQ
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 in which it is found in circulation next to local notes. This is the most severely exchanged currency in the world, worth more than 88% of all global foreign exchange transfers, or an average of $ 6.6 trillion in transactions per day, according to data from 2022. Following World War II, the USD took from the British Pound as the world's reserve currency. For most of its history, the US dollar was gold -back, to the Bretton Woods agreement in 1971 when the gold standard left.
The most important single factor affecting the value of the US dollar is financial policy, shaped by the Federal Reserve (FED). Fed has two mandates: to achieve control inflation and promote full work. Its main tool to achieve these two goals is by organizing interest rates. When prices rise rapidly and inflation is above the target of 2% of the Fed, the Fed will increase rates, which contributes to USD value. When inflation falls below 2% or the unemployment rate is too high, the Fed may lower interest rates, with a greenback weight.
In extreme situations, the federal reserve can also print more dollars and make easing (QE) volume. QE is the process by which the Fed greatly increases the flow of credit to a stuck financial system. This is a non -standard policy proposal used when credit is dry because banks will not lend to each other (out of fear of default counterparts). This is a last way if only the decrease of interest rates is not likely to achieve the required result. It was the Fed weapon chosen to fight the credit crunch that occurred during the great financial crisis in 2008. It involves the Fed printing more dollars and used them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US dollar.
The quantity of tightening (QT) is the reverse process in which the federal reserve stops buying bonds from financial institutions and does not re -consist of the principal from the bonds it holds in new purchases. This is usually positive for the US dollar.
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