USDCHF: Fed’s Commitment to Recovery Hoist Greenback’s Valuation

The American currency climbed by 97 pips against the Swiss franc as the US economy is pictured to grow even at a slow pace. Though the policy fog, the problems in Europe, the global slowdown are making people rationally hesitant, this is believed to be the time investors may want to be buying. The US economy recently endured a financial crisis rivaling the one that triggered the Great Depression, and a severe recession ensued. And then the economy is now moving from recession to recovery.

A continuance of a bullish market is perceived for the USDCHF as the contours of how the recovery is proceeding seem related to the factors that characterized the downturn. The financial crisis was unprecedented since the Great Depression, and the recession was extraordinarily deep, even compared with other severe recessions in the postwar period. Consequently, the US has much more ground to make up relative to other economic downturns. The recent recession also lasted longer than most, and long recessions tend to be followed by slow recoveries. However, the current recovery has been even slower than would be expected given its characteristics. An important factor explaining this slowness has likely been the severe contraction in the housing market, which has been the largest since the Great Depression. Not only have the enormous loss of housing wealth, heavy debt burdens, and tight credit conditions restrained household spending, but the accompanying wave of mortgage defaults has also had considerable repercussions for homeowners, lenders, communities, and the pace of this economic recovery.

In Los Angeles, the housing market contraction and economic downturn is even deeper than those experienced nationwide. As a result, Los Angeles–like the rest of the United States–also is suffering through the slow pace of recovery typically associated with a long recession, a financial crisis, and an extraordinary contraction in housing activity. In light of the economic hardships that have been endured in Los Angeles and nationwide, the Federal Reserve remains fully committed to doing everything it can to promote maximum employment in the context of price stability. As a result, the alleged measures of the Fed sees the recoil of the US economy back to its original health seeing that these injected assistance are deemed to pump-up demand. In effect, the spur of economic activity is likely to flow through other sectors of the economy. Hence, a buy position is deemed viable for the USDCHF pair.


Article by AlgosysFx Forex Trading Solutions