Swiss franc pares gains after inflation release

• Swiss inflation unchanged at 1.7%

The Swiss franc has edged higher on Thursday. In the North American session, USD/CHF is trading at 0.9064, down 0.17%.

Swiss inflation steady at 1.7%

Switzerland’s inflation rate remained at 1.7% y/y in October, matching the market consensus. On a monthly basis, inflation rose 0.1%, compared to -0.1% in September and matched the market consensus. The core rate rose from 1.3% to 1.5% y/y.

Inflation continues to be a massive headache for the major central banks, but the Swiss National Bank has inflation where it wants it, within the target of 0%-2%. The SNB has voiced concern that inflation could breach the 2% ceiling, as electricity, rent and public transport costs have all increased. Switzerland’s economic growth has been weak – GDP was flat in the second quarter and manufacturing has been hurt by soft global demand.

One reason that the SNB has managed to keep inflation below target is the strong Swiss franc, which has dampened inflation. The central bank hasn’t shied away from intervening in the currency markets and boosting the Swiss franc in order to lower the price of imports and dampen inflation.

US dollar slips after Fed decision

The US dollar is down against the major currencies on Thursday in the aftermath of the Fed decision to hold rates. Fed Chair Powell trotted out the usual script that the Fed stood ready to raise rates in order to curb inflation, but the markets weren’t buying it and believe that the Fed is done with its tightening cycle. That sentiment could change if the US posts strong data, such as a better-than-expected nonfarm payrolls report on Friday. The market consensus stands at 180,000, after a massive gain of 336,000 in September.

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USD/CHF Technical

• USD/CHF is putting pressure on resistance at 0.9231. Above, there is resistance at 0.9310
• 0.9145 and 0.9067 are providing support

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