The USD/CHF pair fell to near 0.7910 during the Asian trading session on Tuesday. The CHF pair is facing moderate selling pressure as the US Dollar (USD) extends its correction, after falling on Monday.
As of writing, the US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, is trading 0.12% near 98.20. The DXY index hit its highest level in more than three weeks at 98.86 on Monday as safe haven demand increased after Washington arrested Venezuelan President Nicolas Maduro over drug trafficking charges.
US dollar price today
The table below shows the percentage change in the US Dollar (USD) against the major currencies listed today. The US dollar was weakest against the New Zealand dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.08% | -0.09% | 0.03% | 0.00% | -0.14% | -0.18% | -0.05% | |
| euro | 0.08% | -0.01% | 0.11% | 0.09% | -0.06% | -0.10% | 0.04% | |
| GBP | 0.09% | 0.01% | 0.13% | 0.10% | -0.04% | -0.09% | 0.04% | |
| JPY | -0.03% | -0.11% | -0.13% | -0.00% | -0.15% | -0.20% | -0.07% | |
| Canadian | -0.01% | -0.09% | -0.10% | 0.00% | -0.15% | -0.20% | -0.07% | |
| Australian dollar | 0.14% | 0.06% | 0.04% | 0.15% | 0.15% | -0.04% | 0.08% | |
| New Zealand dollar | 0.18% | 0.10% | 0.09% | 0.20% | 0.20% | 0.04% | 0.12% | |
| Swiss franc | 0.05% | -0.04% | -0.04% | 0.07% | 0.07% | -0.08% | -0.12% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select USD from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The US dollar came under pressure amid a lack of supportive fundamentals on the local side. US ISM Manufacturing PMI data, released on Monday, showed that factory activity contracted again. The manufacturing PMI fell to 47.9 from 48.2 in November.
Investors are bracing for more volatility in the US dollar with the release of US non-farm payrolls data on Friday. Official US employment data will significantly influence market expectations regarding the Federal Reserve’s monetary policy outlook, as almost all policymakers have warned of downside risks to the labor market.
Before the release of the US NFP data, investors will focus on the December ADP employment change data, the December ISM services PMI data, and the November JOLTS job openings data, which will be published on Wednesday.
Meanwhile, the Swiss Franc (CHF) is trading broadly quiet ahead of December’s Consumer Price Index (CPI) data, which will be released on Thursday. Inflation data will influence the Swiss National Bank’s monetary policy outlook.
Frequently asked questions about the US dollar
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a large number of other countries where it is traded alongside local banknotes. It is the world’s most traded currency, accounting for more than 88% of total global forex trading volume, or an average of $6.6 trillion in transactions per day, according to 2022 data. After World War II, the US dollar took the place of 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 disappeared.
The most important factor affecting the value of the US dollar is monetary policy, which is shaped by the Federal Reserve. The Fed has two missions: achieving price stability (controlling inflation) and promoting full employment. The basic tool for achieving these two goals is adjusting interest rates. When prices rise too quickly and inflation is above the Fed’s 2% target, the Fed will raise interest rates, which helps the value of the US dollar. When the inflation rate falls below 2% or when the unemployment rate is very high, the Fed may cut interest rates, which affects the dollar.
In extreme cases, the Fed could also print more dollars and activate quantitative easing (QE). Quantitative easing is the process by which the Federal Reserve dramatically increases the flow of credit into a stuck financial system. It is a non-standard policy measure used when credit dries up because banks will not lend to each other (due to fear of the counterparty defaulting). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It has been the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis of 2008. This involves the Fed printing more dollars and using them to buy U.S. government bonds mostly from financial institutions. Quantitative easing usually leads to a weakening of the US dollar.
Quantitative tightening (QT) is the reverse process whereby the Fed stops purchasing bonds from financial institutions and does not reinvest capital from bonds it holds outstanding in new purchases. It is usually positive for the US dollar.
