Swiss Franc Vulnerable As SNB Threat Grows
Fundamental Forecast for Swiss Franc: Neutral
- Swiss National Bank leaves benchmark rate unchanged at 0.25%
- Consumer Prices Decelerated to 0.9% from 1.0%, despite a 0.1% increase in February
- The Swiss unemployment rate fell to 4.4% from 4.5%, but was unchanged at 4.1% on a seasonally adjusted basis.
After starting the week on a choppy note the Swiss Franc saw its appreciation begin to accelerate despite the SNB reaffirming their commitment to prevent excessive franc appreciation. The statement came following the central bank’s policy meeting where they left the benchmark rate unchanged at 0.25%. Building optimism and an unexpected surge in Euro-zone industrial production were the main drivers of Franc support to end the week. The Swiss unit has tracked the single currency as its economic fortunes are dependent on the Euro-area’s recovery. Policy makers have looked to limit the local currency’s appreciation against the Euro but despite the threat of intervention the EUR/CHF closed below 1.4600 for the first time in over a year. The Franc also reached the highest level in a month against the dollar and yen as markets reversed the flight to safety flows generated by the issues in Greece.
