The Swiss National Bank didn’t raise the floor under EUR/CHF. It didn’t make a new effort to weaken the Swiss franc. Many had expected that the Swiss would lift the peg from 1.20 to 1.25 or even 1.30. This didn’t happen.
This sends EUR/CHF falling sharply from 1.2350 to 1.2250 and the pair is still shaking.
Given the situation in the euro-zone and the fall of the euro, further pegging their Swiss franc to the troubled currency probably wouldn’t be so wise, even though the euro-zone is the main trade partner of Switzerland.
The SNB said that they will defend the 1.20 peg with “utmost determination†and repeated their commitment to buy unlimited quantities of foreign currency. The Swiss National Bank left the Libor Rate unchanged at 0.25%, as expected.
The big Swiss intervention in September was very successful. It lifted the pair from around 1.10 to 1.20, and the SNB has been able to maintain this floor since then.
In general, this statement repeats their words from September.
EUR/CHF was trading very choppily before the release, falling sharply from 1.24 to 1.23 and up again to 1.2350 just before the publication of the Libor Rate Decision by the Swiss authorities.
This has an immediate impact on USD/CHF and also on EUR/USD.
USD/CHF is falling sharply, from around 0.9530 to 0.9430. No push to weaken the Swiss franc means a stronger franc across the board.
EUR/USD is moving in a more moderate manner. After it managed to climb back above 1.30 earlier, it now edges up a bit more, Â to 1.3033. 1.3060 serves as resistance.
Update: EUR/USD is weakening despite positive euro-zone PMIs. This was bound to happen – no move to strengthen the euro eventually weakens it. EUR/USD is under 1.30 once again.
In the euro-zone PMIs came out better than expected, and this also helps the euro. For more on EUR/USD, see the EUR/USD forecast.
