Swiss franc edges lower after Swiss central bank cuts rates

The Swiss franc is showing limited movement on Thursday. USD/CHF is trading at 0.8483, down 0.24% on the day. In the US, it’s a busy day with US GDP, unemployment claims and durable goods orders. As well, Federal Reserve Chair Powell and several FOMC members will deliver remarks.

Swiss National Bank lowers rates to 1%

The Swiss National Bank lowered its cash rate by 25 basis points to 1%, its third straight reduction. The cash rate is now at its lowest level since early 2023. The markets had priced in a 25-bps cut at 60% and the Swiss franc has showed a limited reaction to the rate announcement.

The SNB statement noted that inflation has “decreased significantly”, in part due to the appreciation of the Swiss franc and that inflation, which has fallen to 1.1%, was lower than expected. The statement added that further rate cuts “may become necessary” to ensure price stability.

The stronger Swiss franc has raised the possibility of a currency intervention by the SNB and investors were on the look-out for any hints from the SNB at today’s meeting. The statement didn’t point to any intervention plans, noting that the central bank “remains willing to be active in the foreign exchange market as necessary.” The Swiss franc’s safe haven status has made it an attractive asset at a time of market volatility but this is hurting the critical export sector. The SNB could step in if the Swiss franc continues to appreciate.

The SNB has become a frontrunner among central banks in cutting interest rates, a result of its success in taming inflation. Other major banks have also lowered rates but are still concerned about the upside risk of inflation and have not chopped rates as aggressively as the SNB.

USD/CHF Technical

• USD/CHF is testing support at 0.8475. Below, there is support at 0.8444
• 0.8536 and 0.8567 are the next resistance lines

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