You are here: Home > articles > Forex > Swiss Franc Drops After Dovish SNB Shows No Signs of Tightening
Swiss Franc Drops After Dovish SNB Shows No Signs of Tightening
June 26, 2018 12:44 amVideo
Latest News
- Overview of GBP/USD on May 29. Pound continues to surge and break barriers May 29, 2024
- Overview of EUR/USD on May 29. Calm news and a stubborn euro May 29, 2024
- A chance for the kiwi. Overview of NZD/USD May 29, 2024
- Analysis of GBP/USD pair on May 28, 2024 May 28, 2024
- EUR/USD: What could stop the growth of the euro? A hypothesis May 28, 2024
- Inflation expectations in eurozone downgraded May 28, 2024
- Trading Signals for BITCOIN (BTC/USD) for May 28-30, 2024: sell below $69,000 (21 SMA – 200 EMA) May 28, 2024
- Technical Analysis – EURUSD sets sight on 1.0900 handle May 28, 2024
- GBP/USD: Simple trading tips for novice traders on May 28th (US Session) May 28, 2024
- EUR/USD: Simple trading tips for novice traders on May 28th (US session) May 28, 2024
- GBP/USD: trading plan for the US session on May 28th (analysis of morning deals). The pound hit a new monthly high May 28, 2024
- EUR/USD: trading plan for the US session on May 28th (analysis of morning deals) May 28, 2024
- USD/JPY: trading tips for beginners for European session on May 28 May 28, 2024
- Forex forecast 05/28/2024: EUR/USD, USD/JPY, Gold, Ethereum and Bitcoin from Sebastian Seliga May 28, 2024
- EUR/USD. May 28th. The bulls intend to reach the level of 1.1000 May 28, 2024
- Trading plan for EUR/USD on May 28. Simple tips for beginners May 28, 2024
- GBP/USD. May 28th. The pound sees no reason to stop at its current level May 28, 2024
- USD/JPY: Simple trading tips for novice traders on May 28th. Analysis of yesterday’s forex transactions May 28, 2024
- Video market update for May 28, 2024 May 28, 2024
- GBP/USD: Simple trading tips for novice traders on May 28th. Analysis of yesterday’s forex transactions May 28, 2024
On Tuesday, the Swiss Federal Government’s Expert Group released its economic forecast for the year. In the statement, the officials said that they expect the economy to grow by 2.4%, which was in line with the previous projections. This growth will be attributed to the global demand for Swiss products and increased internal demand. In the coming year, the group announced that the global demand was likely to abate leading the economy to grow by 2.0%. This slow growth will start in the final quarter of the year. The group was also concerned about the ongoing trade dispute between the United States and its key partners.
Today, the Swiss National Bank monetary policy committee met and released their interest rate decision. As expected, the officials left the base lending rate at negative 0.75%. In the accompanying statement, the officials said:
‘Interest on sight deposits at the SNB remains at −0.75% and the target range for the three-month Libor is unchanged at between −1.25% and −0.25%. The SNB will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration.’
This means that the period of ultralow interest rates will continue in the foreseeable future. The officials believe that a weaker Swiss franc is ideal for a country that depends mostly on exports. A low currency leads to increased demand for its products. Presently, they believe that the currency is highly valued against the peer currencies.
In the statement, the officials raised their inflation target for the year. They raised the inflation target to 0.9% from the previous forecast of 0.6%. For the coming year, the officials believe that the inflation will remain at 0.9% and in 2020, the officials expect it to climb to 1.9%. Libor is expected to remain at negative 0.75%. The current state of inflation is attributed to higher oil prices, which have surged by more than 10% this year. Nonetheless, the officials were optimistic about the pace of the Swiss economy, which is higher than expected.
In the statement, the officials remained concerned about the protectionist tendencies emerging in the developed countries. In recent months, the United States has moved to protect its steel and aluminum industry by imposing huge tariffs on steel and aluminum imports. They have also initiated tariffs on China, which is one of its largest trading partners. They were also concerned about the housing market which has seen house prices moving higher. They believe that the price could experience a correction which could have devastating to the entire market.
The USD/CHF pair remained at elevated levels as the divergence between the Fed and the SNB continues. In a statement yesterday, the Fed chair said that there was a room for more interest rates hikes in the near future. In last week’s meeting, he reiterated that there was a possibility for two more hikes this year. This makes owning the dollar more viable than owning the franc. However, as the world seems headed for a trade war, there is a likelihood that traders will buy the francs, which are viewed as a safe haven.
The post Swiss Franc Drops After Dovish SNB Shows No Signs of Tightening appeared first on Forex.Info.
Related Posts: