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02/08/24
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CHF Higher After Weak US Job Numbers
On Friday, the Swiss franc posted sharp gains and USD/CHF traded at about 0.8754, up 0.86% for the day in the North American session. The Swiss franc is trading at the highest level since the end of Jan.
In July, Switzerland’s inflation rate dropped 0.2% m/m, after being unchanged in June and as per the market estimate. Inflation remained unchanged at 1.3% yearly and in line with the market estimate. This was the first drop in 8 months. The core rate also stayed the same at 1.3%.
Inflation remains solidly within the Swiss National Bank’s target of between 0% and 2%. Although inflation is lower than in most of the other major economies, the central bank is still cautious, and it was the first major central bank to cut interest rates in March. The SNB cut again in June which took the cash rate down to 1.25%.
After the second cut Thomas Jordan, the SNB chair said that the Bank decreased rates due to the strong Swiss franc and lower inflation. The SNB will meet again in September and there it is highly likely it will cut rates again as inflation is still moving down and the Swiss franc has surged 5.8% versus the US dollar since May 1.
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