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Why the Swiss franc hold near record highs?

Why the Swiss franc hold near record highs?

The Swiss franc remained firm against the U.S. dollar and euro on Thursday as the United States added Switzerland to its watchlist of currency manipulators, thereby lowering the chances of the Swiss National Bank to weaken the franc.

As of 08:10 GMT, the USDCHF pair extended its plunge for a fourth straight session at 0.9634, edging closer to Wednesday’s bottom of 0.9630, which is the lowest since September 26, 2018.

Versus the euro, the franc dragged the EURCHF pair down to a new low of 1.0740, a level not touched since mid-March 2017.

The U.S. Treasury added the Swiss franc to its list of currency manipulators, urging the Swiss government to slash taxes and boost spending.

“Despite borrowing costs for the Swiss government being among the lowest in the world, fiscal policy remains underutilized, even within the constraints of Switzerland’s existing fiscal rules,” the U.S. Treasury said on Tuesday.

While the yuan was removed from the U.S. currency manipulation list, the franc was added to give a start warning to the SNB, which could make it difficult for the central bank to weaken its currency in the near future.

Last night, markets were cheered by the signing of the phase-one trade deal between the United States and China, but some investors remained skeptical as the deal neither eliminated the tariffs nor addressed critical issues that resulted in the trade showdown.

After the release of weak consumer prices and producer prices data from the U.S., eyes will focus on the import prices and retail sales due later in the day.

While Asian stocks managed to finish at record high, haven demand remained strong amid the presence of low-inflation environment that added to concerns regarding global slowdown.

However, the Swiss franc appeared to be a more favorite refuge compared to the Japanese yen, where the CHFJPY is currently trading near its highest level since December 2018.

The dollar index, which tracks the green currency’s movements versus a basket of six major currencies, fell slightly to 96.89 after falling the previous session to a bottom of 96.86.

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