Swiss Franc strengthens ahead of SNB rate decision
The USD/CHF pair loses momentum to around 0.7985 during the early European session on Thursday. The United States (US) and Iran signed an interim agreement that would end the Iran war, weighing on the US Dollar (USD) against the Swiss Franc (CHF). The Swiss National Bank (SNB) will announce its interest rate decision later on Thursday.
US President Donald Trump and Iran’s President Masoud Pezeshkian on Wednesday electronically signed a memorandum of understanding to end the US and Israel’s war on Iran. Pakistan’s Prime Minister Shehbaz Sharif said that the agreement is taking “immediate effect” after being signed by both Washington and Tehran.
Federal Reserve (Fed) officials left interest rates unchanged in the 3.50%-3.75% range at its June policy meeting while signaling the possibility of higher rates later this year as the central bank gauges the inflation effects of the Iran conflict.
Traders have now fully priced in a rate hike in the coming months as the US central bank focuses on price stability over employment. A hawkish tone from the Fed could support the Greenback in the near term.
The SNB is expected to keep its key policy rate at 0% at the June policy meeting on Thursday and for the rest of the year, according to all the economists who responded to a Reuters poll.
"With those opposing forces from FX and energy prices at play and Switzerland's low inflation starting point, we think inflation pressures weigh less on the SNB than on most central banks ... Our base case remains the zero‑interest‑rate policy stays in place until end-2027,” said Chiara Angeloni, Europe economist at Bank of America.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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