FX.co ★ USD/CHF: The Swiss franc is the most vulnerable currency of the G10

According to analysts, the Swiss currency is losing the race in the long marathon of the key currencies of the Big Ten (G10). However, experts believe that the Swiss currency is not completely exhausted in this race, although its strength is close to zero.

At the moment, the efforts of the Swiss franc are aimed at maintaining the current positions, which are quite shaky. According to experts of Bank of America, in the near future, the Swiss currency will continue to fall. Such a scenario is most likely in the event of a further rise in global bond yields.

Bank of America currency strategists are confident that the Swiss franc is the most vulnerable currency of the G10, and the current increase in the yield of global bonds adds fuel to the fire. They pay attention to the high risks of a further decline in the CHF against the dollar. On August 11, the USD/CHF pair was trading at 0.9238, which is a good result for the "Swiss". A day earlier, the USD/CHF pair was trading near 0.9216, maintaining a positive momentum in the area of the long-term support level of 0.9140. However, in the near future, experts expect the Swiss currency to become cheaper.

Currently, the Swiss franc is not set to win, continuing to decline against other currencies. This is facilitated by not too positive data on the labor market in the country, published on Monday, August 9. The Swiss State Secretariat for Economic Affairs (SECO) provided information on the state of the labor market for July 2021, according to which unemployment remained at 3%, having decreased by 0.1%. Some support for the Swiss franc was provided by data on the unemployment rate without seasonal fluctuations (2.8%). Experts consider this a positive factor for CHF.

In the first month of summer, the Swiss National Bank (SNB) kept the key rate at -0.75%. At the moment, the regulator does not intend to change anything, despite the increase in the country's GDP growth forecast. The heads of the Central Bank once again repeated that the value of the Swiss franc is "quite high". Representatives of the regulator are ready to intervene in the foreign exchange markets if necessary. According to economists, the SNB will leave interest rates at the current level until 2025. They believe that the regulator will follow the ECB in this matter, which is also in no hurry to raise rates.

The Swiss currency is supported by the current policy of the SNB, which, however, is complicated by the risk of currency interventions. The probability of a sell-off of the CHF constrains the growth of the currency, which has the status of a protective asset along with the dollar. The current situation slows down the strengthening of the Swiss currency, although the rise in the price of USD for several weeks creates prerequisites for further growth of the USD/CHF pair. Experts consider an encouraging factor to be the high probability of curtailing stimulus programs by the Fed, whose influence on other G10 currencies, including the Swiss franc, is huge.