The Swiss Franc is trading around $0.8800, weakening further against the US dollar, as traders assess the impact of the US election on the global economy and political landscape.
Investors remain wary of the new Trump administration’s policies, which could have inflationary effects.Meanwhile, the Federal Reserve cut interest rates by 25 basis points, the second cut of the year, with Chairman Jerome Powell signalling a cautious view on future monetary policy.
Weaker-than-expected Swiss CPI data has fuelled expectations that the Swiss National Bank (SNB) may opt for a larger 50 basis points rate cut at its December meeting to prevent inflation from falling below its 0-2% target range. Swiss inflation unexpectedly slowed to its lowest level in more than three years, falling to 0.6% in October.
SNB Vice President Antoine Martin expressed a cautious stance on future monetary policy. He highlighted that, between now and the next decision, there may be changes in conditions that make the current communication invalid. This approach means that the SNB indicates ‘absolutely no commitment’ to a particular policy path.
Addressing the performance of the Swiss Franc, Mr Martin noted that its development this year was not particularly surprising. He explained that due to inflation differences between Switzerland and other countries, the SNB expected the Swiss Franc to appreciate structurally over time in nominal terms. However, he pointed out that in real terms, excluding the effects of inflation, the appreciation was limited.
From a technical perspective, the USDCHF rally continued by breaking 0.8747 resistance and the intraday bias returned to the upside. The current upside of 0.8373 could target the 61.8% retracement level of 0.9223 to 0.8373 pullback at 0.8899 next. A move below 0.8700 minor support will change the intraday bias to neutral again. But the outlook will remain bullish as long as 0.8614 support holds, in case of a pullback.
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Ady Phangestu – Market Analyst
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