Franc Hovers tumbled in European trade on Thursday against a basket of major rivals, resuming losses against the US dollar and nearly hitting five-week lows. This decline follows the release of Swiss inflation data, which indicated weak price pressures that may prompt further interest rate cuts by the Swiss National Bank (SNB).
The Price
The dollar fell 0.3% against the Swiss franc to 0.9038, with a session low of 0.9000. On Wednesday, the franc closed up 0.3% against the dollar, marking its first gain in three days and moving away from five-week lows at 0.9050.
Swiss Inflation
Recent data showed that Swiss consumer prices rose by 1.3% year-on-year in June, slightly below the estimates of 1.4%. On a monthly basis, prices remained flat, missing the forecasted 0.1% rise. This tepid inflation data strengthens the likelihood of a third interest rate cut by the SNB later this year.
The SNB
At the June 20 meeting, the Swiss National Bank surprised markets by cutting interest rates by 25 basis points to 1.25%. The SNB was the first major central bank to start the process of policy easing and rate cuts back in March, aiming to boost the economy. The bank believes local inflation is under control but remains vigilant and ready to intervene if necessary.
Conclusion
The Swiss franc’s decline highlights market reactions to weak inflation data and the anticipation of further interest rate cuts by the SNB. As the SNB continues to monitor inflation and economic conditions, investors are closely watching for any signs of additional policy changes that could impact the franc’s performance.
FAQs
Why is the Swiss franc declining? The Swiss franc is declining due to weak inflation data
which suggests that the Swiss National Bank may implement further interest rate cuts to stimulate the economy.
What were the recent Swiss inflation figures? Swiss consumer prices rose by 1.3% year-on-year in June, below the estimated 1.4%. On a monthly basis, prices were flat, missing the forecast of a 0.1% rise.
What is the current exchange rate for the dollar against the Swiss franc? The dollar fell 0.3% against the Franc Hovers to 0.9038, with a session low of 0.9000.
Why did the SNB cut interest rates in June? The Swiss National Bank cut interest rates in June to boost the economy amid weak inflation pressures. It was the first major central bank to start the process of policy easing and rate cuts earlier this year.
Will the SNB cut interest rates again? Given the current weak inflation data
it is likely that the SNB will cut interest rates again later this year to support economic growth.