Market Data 
- The Swiss Franc trades mixed – weakening to the US Dollar but up against the Euro and the Pound Sterling.
- Swiss data showed an unexpected decline in retail sales but an unforeseen recovery in manufacturing PMIs.
- The data suggests the SNB will not be diverted from its easing path.
The Swiss Franc (CHF) is trading mixed in its key pairs on Tuesday, mostly due to the fluctuations of its counterparts, to which it is playing the role of passive partner. Against the US Dollar (USD) the Swiss Franc is lower by almost half a percent in the 0.9080s (USD/CHF) whilst against the Euro and the Pound Sterling it is trading higher by a similar margin.
Swiss data out on Tuesday was mixed, with Real Retail Sales missing estimates by showing a 0.2% decline in February versus the 0.4% increase expected, according to the Federal Statistical Office.
Swiss SVME Manufacturing Purchasing Managers’ Index in March, on the other hand, beat expectations by coming out at 45.2 versus 44.9 forecast.
Swiss Franc mixed after Easter break
The Swiss Franc weakened in its most heavily traded pairs during March after the Swiss National Bank (SNB) took the unexpected step of cutting interest rates from 1.75% to 1.50% at its last policy meeting. This makes it the first major central bank to begin cutting interest rates. Lower interest rates are generally negative for a currency as they reduce capital inflows.
The SNB’s move came on the back of Swiss data showing a faster-than-anticipated slowdown in both inflation and economic growth during the last quarter of 2023 and beginning of 2024.
The continued mixed economic data – with Retail Sales in February falling compared to both the previous month and year, and Manufacturing PMI still below 50 and therefore in contraction – suggests there is unlikely to be a change in the thrust of the SNB’s policy towards favoring lower interest rates.
This should keep the pressure up on the Franc, especially against USD, given lower bets that the Federal Reserve (Fed) will cut interest rates early given continued robust economic data.
Technical Analysis: USD/CHF continues trending higher
USD/CHF – the number of Swiss Francs that can be bought with one US Dollar (USD) – extends its uptrend.
US Dollar versus Swiss Franc: 4-hour chart
The pair is threatening to print overbought, according to the Relative Strength Index (RSI), assuming a bullish close on the current four-hour bar. If so it will recommend that bulls do not add to their positions as the pair is at risk of pulling back.
Beyond that, the pair is overall seen continuing the intermediate-term uptrend. The next target lies at 0.9113, but it is soft – tougher resistance does not appear until the cluster of daily moving averages (not shown) at the 0.9187 level, followed by the key highs at 0.9246.
It would take a deeper slide below 0.8960 to bring into question the dominance of the uptrend and suggest the possibility of a reversal.
A break back inside the old range, confirmed by a move below 0.8890, would be required to mark a short-term trend reversal and the start of a deeper slide.
SNB FAQs
The Swiss National Bank (SNB) is the country’s central bank. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates. For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year.
The Swiss National Bank (SNB) Governing Board decides the appropriate level of its policy rate according to its price stability objective. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Yes. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.
The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment. Each of these assessments results in a monetary policy decision and the publication of a medium-term inflation forecast.
