USDCHF - The new Treasury Secretary will weaken the dollar?!The USDCHF currency pair is located between EMA200 and EMA50 in the 4H timeframe and is moving in its upward channel. If the upward movement continues, we can see the midline of the channel and the supply zone, and sell in the form of scalps with the appropriate risk reward. A downward correction towards the demand zones will provide us with the next buying positions for this currency pair.
Chris Turner, an analyst at ING, noted in a recent report that the dollar is likely to remain stable through the end of the year, even if the Federal Reserve cuts interest rates in December. While markets remain divided on the likelihood of a rate cut next month, ING anticipates a 25-basis-point reduction. Turner suggested that such a move, coupled with potential seasonal weakness, could weigh negatively on the dollar. However, amid geopolitical uncertainties and the stronger performance of the U.S. economy compared to the Eurozone, the dollar is expected to remain supported by demand for safe-haven assets.
According to the U.S. Conference Board’s Consumer Confidence Index, “the probability of a U.S. recession within the next 12 months reached its lowest point in November.”
The minutes from the Federal Reserve’s November meeting, released last night, revealed that some policymakers believe the pace of rate cuts could accelerate if economic activity declines or the labor market weakens. Conversely, some officials warned that persistent inflation might necessitate halting the easing cycle and maintaining rates at restrictive levels. Many policymakers highlighted uncertainty about the neutral rate, emphasizing the need for a gradual reduction in monetary restrictions.
Scott Bennett, the newly appointed U.S. Treasury Secretary, believes that a weak dollar policy could become a cornerstone of Trump’s second administration. In a letter published earlier this year by Bennett’s hedge fund, he argued that Trump is more likely to pursue a dollar-weakening strategy than rely on tariffs. Bennett stated that tariffs tend to drive inflation and strengthen the dollar, which conflicts with efforts to revive U.S. manufacturing.
Bennett predicted that a weaker dollar early in Trump’s second term could enhance the competitiveness of U.S. industrial production. He argued that a weaker dollar, coupled with cheap and abundant energy, could fuel economic growth. This perspective diverges from Wall Street’s current consensus, which leans toward a stronger dollar. Bennett remarked that dollar strengthening might only occur later in Trump’s term if efforts to onshore production prove successful.
He also pointed to the constraints imposed by tariffs, corporate tax cuts, and budget deficits, which he believes hinder Trump’s economic objectives. Bennett suggested that focusing on deliberate currency devaluation could simultaneously achieve GDP growth, fiscal improvement, and stock market gains—at least in nominal terms.
Bennett stressed that targeting a weaker dollar against the Chinese yuan and Japanese yen could yield more impactful results. He even suggested that such a strategy could allow China to claim it had avoided U.S. tariffs, presenting it as a “win.”
Bennett’s statements carry significant weight given his new role as Treasury Secretary. He also briefly referenced the concept of Bretton Woods 3, noting that while it is not currently a primary scenario, conditions for its realization are in place.
Meanwhile, Swiss National Bank Chairman Schlegel stated that Switzerland benefits from a flexible inflation framework that enables it to respond more effectively to economic shocks. He noted that while the Swiss franc is recognized as a safe-haven currency, this very characteristic can lead to appreciation during global recessions, which may harm Switzerland’s economy. The SNB remains committed to price stability, which Schlegel identified as a key factor in the country’s economic success. He also did not rule out the possibility of a return to negative interest rates.
