Swiss GDP and SNB Chairman Jordan Send CHF

For about three months, the CHF to USD rate has been trading within a range, with USD/CHF stabilizing above 0.90. USD/CHF surged to 0.9224 in April, but buyers were unable to maintain these gains, causing the pair to fall back to the 0.90 zone, which held as support and this pair continues to trade in this range since.

This trading pattern indicates a strong support level around 0.90 and resistance around 0.92. The inability to sustain gains above 0.92 suggests that buyers are encountering significant selling pressure at higher levels. As long as USD/CHF stays within this range, it indicates a period of consolidation, with traders looking to trade the range, selling at the top and buying at the bottom.

The Swiss National Bank’s (SNB) decision to lower interest rates by 25 basis points has exerted downward pressure on the Swiss Franc (CHF), potentially driving the USD/CHF pair higher. Given this dovish stance, the USD/CHF pair might experience additional upward movement, potentially pushing towards resistance levels around 0.9240-0.9250. The positive risk sentiment in the markets and the SNB’s dovish outlook, which includes expectations of further rate cuts.

USD/CHF Chart Daily – The 200 SMA Held As Support

As a result, there is currently no strong catalyst for a rally in the Swiss Franc, meaning any gains for the CHF might stem from a weakening USD rather than intrinsic strength in the CHF. To technically reverse the bullish trend in USD/CHF, sellers would need to push the price below the 0.90 level. Until then, the pair is likely to remain in an upward trajectory, supported by the current economic conditions and central bank policies.

The Buck on the other hand started attracting some strong bids after the positive US consumer confidence data earlier this week, which led to a significant rise in Treasury yields. This data indicates that employment remains strong in the US, which is favorable for economic growth.

In the Asian session today, the SNB Chairman Jordan held a speech in Seoul, delivering opening remarks at the Bank of Korea International Conference, while in early European session we had the Q1 Swiss GDP report, which is a bit outdated though.

Switzerland Q1 GDP data released by the Federal Statistics Office – 30 May 2024

• Switzerland Q1 GDP +0.5% vs +0.3% expected
• Switzerland Q4 GDP was +0.3%

With this positive GDP growth, there might not be significant concerns for the Swiss National Bank (SNB) regarding economic performance. However, the central bank will closely monitor how weakness in the Swiss franc might impact inflation levels. A weaker currency can potentially lead to higher import prices, contributing to inflationary pressures in the economy. Therefore, the SNB faces a delicate balance between supporting economic growth and managing inflation.

As the first mover in cutting rates, the central bank will need to carefully assess the impact of its monetary policy actions on both economic activity and price stability. This requires a nuanced approach to policy-making to ensure a favorable outcome for the Swiss economy.

USD/CHF Live Chart