USD/CHF Resumes Uptrend Despite Threats From SNB’s Jordan
USD/CHF retreated to 0.90 earlier this week, but it started reversing higher yesterday as moving averages held as support. Core consumer inflation CPI posted an increase and the Swiss National Bank chairmam Jordan made some hawkish comments but traders didn’t take them into account too much.
Since reversing from lows around 0.8550s in July, this forex pair has been bullish, which continued until the beginning of October, when the price reversed down at approximately 09250 as the conflict in the Middle East erupted. This recovery has been fueled in large part by a favorable gain in US bond rates, which has maintained the USD bullish, although the CHF has benefited from the safe haven status since early October.
So, there has been a reversal in the last month as Middle East tensions have kept safe havens like US Treasuries in demand, despite yields falling to some extent. The tensions have impacted mood negatively, and risk assets have been retreating while safe havens rose, resulting in a decline in this currency pair below 0.89 late last month.
But the decline stopped as the sentiment improved and now this pair is above 0.90 again. The Swiss core CPI consumer inflation showed an increase in October, while the chairman of the Swiss National Bank tried to make some warnings about keeping rates high, but markets thin that they will just follow the ECB and stay on hold.
October Consumer Pirce Index Report for Switzerland Released by SECO
- October CPI YoY +1.7% vs +1.7% expected
- September CPI YoY +1.7%
- Core CPI YoY October +1.5%
- Prior core CPI YoY +1.3%
Consumer prices increased by 0.1% in the month. When core annual inflation actually increased in October, the standstill in headline annual inflation isn’t all that comforting. However, for the time being, this is well within the SNB’s capability.
Swiss National Bank Chairman Jordan’s Speech
- Rate hikes not ruled out
- UBS acquisition of Credit Suisse prevented global financial crisis
- Effective public liquidity backstop is needed
- Emergency liquidity provided without collateral should not become regular part of SNB’s instruments
- Faster and larger outflows are a new reality for banks
- We do not know how big is the impact of accumulated tightening so far
USD/CHF Live Chart
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