Peter A Rosenstreich
Swissquote Bank Ltd
As was widely expected, the Swiss National Bank held its policy unchanged. Incoming macroeconomic data has been mixed and political risk from Europe has failed to materialise, providing no impetus for the SNB to shift policy strategy.
On the economic front, despite recent improvement in inflation data, the SNB downgraded its 2018-2019 inflation forecast. The distant downgrade gave the meeting a slightly dovish tint from its prior, more cautiously optimistic, outlook.
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The bank also reiterated its commitment to negative interest rates and FX intervention. With the domestic economy growing below trend and only surveys providing evidence of potential pick up, the SNB is correct in keeping policy untouched. With outlook for domestic data subdued, CHF will remain at the mercy of European events while less sensitive to shifts in global yields.
The pace of the ECB normalisations and European political uncertainty will continue to drive CHF through EURCHF direction. With European peripheral yields tightening, indicating less political concerns (French elections, Italy general election and Greek debt funding issues), CHF should weaken against the Euro. EURCHF base at 1.0860 should support a recovery bounce back to 1.1000 resistance.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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