The Swiss franc is practically unchanged on Thursday. In European trade, USD/CHF is trading at 0.9245, down 0.05% on the day.
SNB cuts back on forex purchases
The Swiss National Bank (SNB) hasn’t been shy about intervening in forex markets in order to influence the USD/CHF exchange rate. The reason for these moves is to curb demand for the Swiss franc, in order to ensure prices stability and keep Swiss exports competitive on world markets. The SNB went on a forex shopping spree in 2020, selling some 110 billion francs in order to buy foreign currencies. The intervention went to such an extent that the Trump administration labeled Switzerland a currency manipulator in December 2020.
The global recovery has had a dramatic impact on SNB intervention. The central bank axed its forex purchases to just 296 million francs in the first quarter of 2o21. As the global economy has recovered, risk sentiment has risen, making the safe-haven Swiss franc less attractive to investors.
Retail sales settled down, with a modest gain of 2.8% in May YoY. This follows a massive surge of 34.8% in April. The latter figure should be taken with a grain of salt, as the April 2020 release was particularly weak due to the introduction of Covid health restrictions.
Inflation levels remain subdued in Switzerland. In June, CPI showed a gain of 0.6% YoY, unchanged from May. This was just shy of the estimate of 0.6%. The SNB has an inflation target of 2%, and with inflation hovering well below this level, has no plans to tighten policy. Currently, interest rates are at the ultra-low level of -0.75%, another tool the central bank uses to curb enthusiasm for the Swiss franc.
USD/CHF technical
-
USD/CHF faces resistance at 0.9277. Above, 0.9367 is a monthly resistance line.
-
On the downside, there is support at 0.9129. This is followed by a monthly support level at 0.9031.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.