- Swiss franc among biggest gainers from dovish FOMC meeting.
- USD/CHF suffers the worst decline in more than a year
The Swiss franc is rising sharply across the board strengthened after the FOMC meeting. The Fed signaled it could cut rates over the next meetings leading to even lower yields that together with rising tensions in the Middle East favored the for the Swiss franc.
On the other side, the greenback remains under pressure as markets price in a rate cut from the Fed after Wednesday meeting. In Europe, also a rate cut from the European Central Bank is also expected. “We expect a 10bp cut in all of the ECB’s main policy rates in September of this year, and a second 10bp reduction in Q1 of next year. This would take the ECB’s deposit rate down to a low of -0.6% and the refi rate into negative territory for the first time”, explained ABN AMRO analysts.
All factor appears to be supporting the downside in USD/CHF. So far today it lost almost 150 pips and 220 pips over the last two days. The move continued even as the US Dollar experimented a modest correction against its other rivals. Recently broke below 0.9800 and fell to 0.9791, a level last seen back in early January.
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