SNB notes concern over Swissie value

The Swiss franc is pointing downwards for a fourth straight day. Currently, USD/CHF is trading at 0.8832, down 0.13% on the day.

SNB maintains monetary policy

The SNB held the course at its policy meeting, maintaining rates at -0.75 per cent, which are the lowest in the world. The central bank has continued its stance of expansionary monetary policy in order to stabilise economic conditions. Nevertheless, the Swiss franc remains continues to appreciate against the US dollar. Although the pro-cyclical currencies have recorded the strongest gains against the dollar, the safe-haven Swissie has also moved higher. The currency dropped below the psychologically important 0.90 level in early December and has risen another 1.6% since then. In a press statement after the rate decision, the bank noted its concern over the high value of the Swiss franc, saying that it remains willing to intervene more strongly in the foreign exchange market. It’s doubtful, however, if this stern warning will have much effect on curbing the market enthusiasm for the Swiss franc.

The SNB has battled hard to stem the Swiss franc’s appreciation, spending some 90 billion Swiss francs in the first half of 2020. These massive amounts have raised the ire of the US Treasury, which labeled Switzerland a currency manipulator on Wednesday. The SNB has defended the move as necessary to relieve pressure on the Swiss franc and avoid deflation. SNB Chairman Jordan was blunt in his rejection of the Treasury report, saying that it would have no effect on the bank’s monetary policy.

With 2021 expected to bring a rebound in growth and vaccine relief from Covid-19, the Swiss franc may find itself less in demand as risk sentiment is expected to increase. This would be sweet music to the ears of the SNB.

USD/CHF Technical

• USD/CHF faces resistance at 0.8945. Above, there is resistance at 0.8993
• The pair has broken below 0.8850 in the North American session. The next support level is 0.8803
• The 10-day MA line remains relevant.

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