• 313 days Will The ECB Continue To Hike Rates?
  • 314 days Forbes: Aramco Remains Largest Company In The Middle East
  • 315 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 715 days Could Crypto Overtake Traditional Investment?
  • 720 days Americans Still Quitting Jobs At Record Pace
  • 722 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 725 days Is The Dollar Too Strong?
  • 725 days Big Tech Disappoints Investors on Earnings Calls
  • 726 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 728 days China Is Quietly Trying To Distance Itself From Russia
  • 728 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 732 days Crypto Investors Won Big In 2021
  • 732 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 733 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 735 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 736 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 739 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 740 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 740 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 742 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Long-Term Chart of Swiss Franc (CHF) In US Dollar and Over-Under Valuation Chart

CHF has gone up 130% under the weak dollar policies of GW Bush, Bernanke and Obama over the past ten years, as can be seen in the Fig. 1. This is in sharp contrast to the strong dollar policy of Reagan.

Overshoot, mean reversion, and undershoot are all part of the behavior of financial markets dominated by speculators. The Forex market is the domain of speculators big, e.g., George Soros, and small and govt manipulators. Fig. 2 shows overshoot and undershoot of the CHF w.r.t. the USD over the past 40 years.

What would bring CHF down (as it has been the case several times in the past)? Lest people forget Switzerland relies very heavily on imports and exports, i.e., global trade. Not only is CHF grossly over-valued compared to the USD, it is also over-valued compared to the Euro, its the largest trading partners.

The current bearish sentiment against the US dollar is the result of massive global imbalances caused primarily by economic and financial manipulators in the US over the past two decades. This has allowed Americans to live beyond their means year after year after year. All such things always come to an end, i.e., reality forces them to an end. The current fight over the debt ceiling in the US is recognition of the fact that one could not continue on a certain path of kicking the can down the road forever. The same applies for the global imbalances.

Some economic or political event would trigger massive adjustments in the economies of various countries and that would inevitably lead to a massive rally in the US dollar when Americans would be forced to live within their means by lowering their consumption, especially, consumption of foreign goods and services. It could happen sooner than most are prepared for.

 

Back to homepage

Leave a comment

Leave a comment