The Swiss Franc edged higher despite expectations that the Swiss National Bank would maintain interest rates at the current -0.75%. The SNB said that officials continue to believe that the Swiss Franc is currently overvalued and hinted clearly that it was the central bank’s desire to weaken the currency over time. Markets were surprised, however, by the SNB’s inflation forecast which was upgraded through next year. Also surprising was the “neutral” sentiment when markets were expecting a dovish bias; analysts point out that if the situation in Greece continues to deteriorate then the SNB is likely to lower interest rates still more in an effort to discourage safe haven buying.
As reported at 9:57 am (BDT) in London, the EUR/CHF was trading lower at 1.0455 Swiss Francs, not too far from the day’s low; the pair’s trading band was 1.0444 Swiss Francs at the low end and 1.0476 Swiss Francs at the high. The USD/CHF was also lower at 0.9157 Swiss Francs, less than a handful of pips from the session low.
Dollar under Pressure on Fed Uncertainty
The US Dollar Index, a measure of the greenback’s strength relative to its major peers, lost 0.6% and touched a 1-month trough after a disappointment from, the Federal Reserve Bank. Yesterday’s conclusion of the monetary policy meeting failed to yield any clear direction for interest rates. The Index was trading lower at 93.732 .DXY, moving away from the day’s low of 93.64 .DXY. Janet Yellen, the chair of the Federal Reserve, said that any rate hike would depend on continued improvements in the US labor market.