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USD/CHF ticks down to near 0.8060, investors await Trump-Zelenskyy meet

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USD/CHF ticks down to near 0.8060, investors await Trump-Zelenskyy meet

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New update 2025.08.18 14:13
USD/CHF ticks down to near 0.8060, investors await Trump-Zelenskyy meet

update 2025.08.18 14:13

  • USD/CHF faces selling pressure as dovish Fed bets have battered the US Dollar.
  • Traders are confident that the Fed will cut interest rates in the September meeting.
  • Investors await Trump-Zelenskyy meeting to get cues whether Ukraine is ready for peace agreement with Russia.

The USD/CHF pair edges lower to near 0.8060 during the Asian trading session on Monday. The Swiss Franc pair ticks down as the US Dollar (USD) trades with caution near its almost three-week low, with traders remaining confident the Federal Reserve (Fed) will resume its monetary expansion cycle, which it paused after the December 2024 meeting.

During the press time, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades cautiously around 97.80.

According to the CME FedWatch tool, the probability of the Fed to cut interest rates in September is 82.6%. Fed's interest rate cut speculation has intensified due to cooling United States (US) labor market conditions.

Meanwhile, investors await Jackson Hole Symposium to get fresh cues about the US interest rate outlook, which is scheduled for August 21-23.

In Monday's session, financial market participants will pay close attention to meeting between US President Donald Trump, Ukrainian President Volodymyr Zelenskiy, and NATO members at the White House to discuss terms laid down by Russian leader Vladimir Putin for ending war in Ukraine.

In the Swiss region, investors await Q2 Industrial Production data, which will be published at 06:30 GMT. In the previous quarter, Industrial Production rose at an annual pace of 8.5%.

US Dollar FAQs

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 where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world's reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed's 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed's weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.


Date

Created

 : 2025.08.18

Update

Last updated

 : 2025.08.18

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