USD/CHF Tests the Support at 0.8670, Despite the SNB Turning Neutral
USD/CHF continues to remain bearish, benefiting as a safe haven, despite the Swiss National Bank returning to the sidelines
USD/CHF turned bearish a few months ago, and sellers have taken control since the beginning of October. Markets have shown signs of anxiety with geopolitical risks remaining high, benefiting the CHF as a safe haven, while the USD is retreating due to lower inflation figures.
The decline picked up pace on Wednesday, after The FED has weighed further on this pair, as they confirmed that rate cuts are coming, pushing the USD lower. This pair fell below 0.90 in late October and has since maintained its positive momentum. As a result, the USD/CHF exchange rate has gone below 0.87, and additional declines are expected in the coming days/weeks if this zone is broken. The Swiss National Bank turned neutrl today, but that’s not stopping this pair from slipping lower.
SNB Monetary Policy Decision for December 2023
- SNB leaves the policy rate unchanged at 1.75% as expected
- Prior policy rate was 1.75%
- Will adjust monetary policy if necessary to ensure inflation remains in range consistent with price stability over the medium-term
- Willing to be active in FX market as necessary
- 2023 inflation seen at 2.1% (prior 2.2%)
- 2024 inflation seen at 1.9% (prior 2.2%)
- 2025 inflation seen at 1.6% (prior 1.9%)
- Full statement
The SNB’s newest policy decision has no major shocks, as they maintain a more neutral posture. They eliminated the phrase “further tightening may become necessary,” opting for a posture that reaffirms that they are now on pause. At present, lower inflation estimates simply serve to support this policy change.
Press Conference by SNB Chairman, Thomas Jordan
- We are no longer focusing on forex sales
- We believe monetary conditions are appropriate at the moment
- We do not forecast any tightening given the forecasts so far
- Will adapt policy to contain inflation within price stability target
- Will look at inflation very closely when making next decision
- Inflation pressures have decreased slightly but uncertainty remains high
- Swiss inflation likely to rise in the coming months
- Assessment for upside and downside risks for inflation are currently balanced
- Will adjust monetary policy if necessary to keep within price stability goal
This reinforces the perception that they have adopted a more neutral policy approach, as seen by the shift in terminology in the prior statement.
USD/CHF Live Chart
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