| Hyposwiss: Greater sense of reality |
| 29.07.10 12:23 | ||||||
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Recent weeks have seen the US dollar relinquish its gains against the Swiss franc. Its exaggerated rise to CHF 1.16 was followed by the expected retreat and one US dollar now once again costs CHF 1.05. Back in March, the greenback was trading at around CHF 1.05. In the slipstream of the growing risk aversion on the global financial markets, it appreciated by more than 11% against the Swiss franc, peaking at CHF 1.16 in mid-June. Over the same period it also gained nearly 14% against the euro. This once again confirms the USD‘s role as a „safe haven“ currency. Given its history, the US currency certainly can be described as a safe haven in comparison with the more cyclical euro, which was exposed to strong market scepticism over the same period. However, this picture is not sus-tainable against the Swiss franc. USD/CHF: Greenback’s fundamentals not convincing The data underpinning the US dollar are not convincing. The US economy is performing positively, but the state of the US national budget is anything but confidence-inspiring. Thus, the US economy is burdened with high levels of debt – unlike Switzerland, which has a national budget with a favourable debt ratio of 51%. The Swiss economy is also performing positively, even in comparison with the USA where the economic recovery is merely at a more advanced stage than in Switzerland. Yet another point in Switzerland‘s favour is the situation on the labour market, which is only gradually improv-ing in the USA. Conclusion: US dollar set to weaken The driving force behind the resurgent US dollar is investor interest, and this is not a factor which is rooted in any fundamental strength of the United States. For the time being, the US dollar will be able to benefit from the tense situation in the eurozone and will remain stable against the euro for the next few weeks (3-month forecast: 1.25-1.30). However, its surge against the Swiss franc is likely to be over for now. The greenback should remain below the 1.10 mark against the Swiss franc (3-month forecast: 1.02 to 1.07) and in twelve months‘ time the US dollar should be lower against both the Swiss franc (forecast 1.00-1.05) and the euro (forecast: 1.35-1.40). Dr. Thomas Stucki is the CIO and a member of the senior management of Hyposwiss Private Bank. Mr. Stucki holds a doctorate degree in economics from the University of Bern and is a CFA Charterholder. He manages the Investment Center of Hyposwiss Private Bank with around 30 staff. Thomas Stucki is responsible for the asset allocation of client mandates of CHF 3.4 billion. In his previous job, he was Head of Asset Management at the Swiss National Bank. Hyposwiss Private Bank Ltd. Hyposwiss Private Bank is a Swiss private bank with 120 years experience. We offer our private customers a wide range of services in the areas of private asset planning and asset management. Specialised in individual asset management, we are the private banking competence centre of the St.Galler Kantonalbank Group. Hyposwiss Private Bank currently has 175 staff and manages customer assets of 9.1 billion Swiss francs.
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