Dollar Surges Against Franc on Carry Trade and Widening Rate Gap
The US dollar is experiencing strength against the Swiss franc on Wednesday, driven by the carry trade. Initially, the dollar fell against the franc before rebounding and showing signs of life. This reversal suggests a strong market trend despite some weak economic indicators.
Christopher Lewis, a technical analyst at DailyForex, attributes this trend to the significant interest rate differential between the US and Switzerland, which is widening further. The Swiss National Bank has no intention of raising rates, keeping them close to zero, while the Federal Reserve in the US continues to hike interest rates.
Lewis believes that as long as the dollar stays above the 0.82 level, it will remain bullish against the franc. He also notes that this move is a nice impulsive one, and any drop at this point would be seen as value to add to an existing position.