Swiss Franc Slides As Soft Inflation Data Spurs SNB Rate Cut
April 04 2024 - 2:00AM
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The Swiss franc weakened against other major currencies in the
European session on Thursday, as Swiss consumer price inflation
unexpectedly weakened to the lowest since September 2021 signaled a
growing chance that the Swiss National Bank will reduce policy rate
at its next meeting in June.
Data from the Federal Statistical Office showed that the
consumer prices logged an annual increase of 1.0 percent in March,
following a 1.2 percent rise in February. This was the lowest since
September 2021, when the rate was 0.9 percent. Economists had
forecast prices to climb 1.3 percent.
On a monthly basis, the consumer price index remained flat. Core
consumer prices gained 0.1 percent on month in March and increased
1.0 percent from the same period last year.
There is a growing chance that the Swiss National Bank will act
at its next meeting in June, the economist added.
In March, the SNB unexpectedly reduced the policy rate by 25
basis points to 1.50 percent.
The SNB forecast consumer prices to rise 1.4 percent this year
and 1.2 percent in 2025.
The European stocks rose after revised data showed economic
activity in the eurozone's private sector expanded for the first
time in ten months in March. The eurozone services PMI improved to
51.5 from 50.2 in February.
Minutes from the European Central Bank's latest policy meeting
is awaited later in the day.
In the Asian trading today, the Swiss franc held steady against
its major rivals.
In the European trading now, the Swiss franc fell to nearly one
year lows of 0.9851 against the euro and 1.1486 against the pound,
from early highs of 0.9786 and 1.1421, respectively. If the franc
extends its downtrend, it is likely to find support around 0.99
against the euro and 1.15 against the pound.
Moving away from an early 3-day high of 0.9026 against the U.S.
dollar, the franc edged down to 0.9074. The franc may test support
near the 0.91 region.
Against the yen, the franc dropped to 167.14 from an early high
of 167.99. On the downside, 166.00 is seen as the next support
level for the franc.
Looking ahead, the ECB is set to publish the account of the
monetary policy meeting of the Governing Council held on March 6
and 7, at 7:30 am ET.
In the New York session, U.S. weekly jobless data and U.S. and
Canada trade data for February are slated for release.
At 12:15 pm ET, Federal Reserve Bank of Richmond President
Thomas Barkin will give a new speech on the economic outlook before
the Home Building Association of Richmond, in Richmond, U.S.
Half-an-hour later, Federal Reserve Bank of Chicago President
Austan Goolsbee will participate in a moderated question-and-answer
session before the Multi-Chamber Economic Outlook Luncheon and
Expo, in Oak Brook, U.S.
At 2:00 pm ET, Federal Reserve Bank of Cleveland President
Loretta Mester will participate in a conversation on the economic
outlook before virtual Global Interdependence Center Executive
Briefing, in Cleveland, U.S.
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