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SNB expected to deliver 0.75% hike

Date:

The Swiss franc has started the week in negative territory. In the North American session, USD/CHF is trading at 0.9674, up o.31%.

Swiss National Bank to continue tightening

The Times They Are a Changin.

This is nowhere more apparent than in Switzerland, where the SNB is poised to end the negative rate era on Thursday. The safety of the Swiss franc has allowed the SNB to offer negative rates to investors, who were only too happy to park their funds during times of uncertainty, of which they have been plenty. While the Swissie’s value as a reliable safe haven asset hasn’t changed, what has changed is a world of low inflation, particularly after the Russian invasion of Ukraine.

Switzerland’s inflation is running at an annual clip of 3.5%, for which many central bankers would give their right arm. Still, inflation is on the rise and has become enough of an issue for the SNB that in June, it raised rates by 0.50%, bringing the benchmark rate to -0.25%. At the time, inflation was at 3.4%, its highest level since 1993. The rate hike hasn’t lowered inflation, which rose to 3.5% in August. The SNB is expected to strike again, with the markets having fully priced in a 75bp increase at the Thursday meeting, with a possibility of a massive full-point hike. Barring a huge surprise, this marks the end of the negative rate era, and I would expect the Swissie to gain ground if the SNB raises rates by 0.75% or 1.00%.

The Federal Reserve meets a day earlier, on September 21st, and is also expected to deliver a 0.75% rate increase, with an outside chance of a 1.00% hike. The US economy has been performing fairly well, allowing the Federal Reserve to continue tightening policy as it grapples with high inflation.

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USD/CHF Technical

  • USD/CHF is testing resistance at 0.9720. Next, there is resistance at 0.9760
  • There is support at 0.9642 and 0.9524

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.

Kenny Fisher

Kenny Fisher

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  • Source: https://www.marketpulse.com/20220919/snb-expected-to-deliver-0-75-hike/
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