Franc Falls After SNB Maechler's Warning Over Premature Rate Hike
28 Mars 2018 - 11:04AM
RTTF2
The Swiss franc dropped against its major counterparts in the
European session on Wednesday, after the Swiss National Bank
Governing Board member Andrea Maechler cautioned that a premature
rate hike in Switzerland could be counterproductive to the economic
development.
Defending negative interest regime, Maechler said in an
interview with Handelszeitung that there would be a big risk of
endangering the favorable development, if the bank halts its
expansive monetary policy.
"If we now end the expansionary monetary policy, so there would
be a risk that we would endanger the favorable development."
The Swiss franc remained highly valued and the situation on the
foreign exchange market are still fragile, Maechler told.
The currency has been trading lower against its major rivals in
the Asian session, with the exception of the yen.
The Swiss currency weakened to more than a 2-month low of 1.3486
against the pound, from Tuesday's closing value of 1.3401, and held
steady thereafter. The franc is seen finding support around the
1.38 region.
The Distribution Trades Survey from the Confederation of British
Industry showed that UK retail sales are forecast to rebound in
April after declining for the first time since October 2017.
About 32 percent of retailers said that sales volumes were up in
the year to March, whilst 40 percent said they were down, giving a
balance of -8 percent.
The franc that ended Tuesday's trading at 0.9467 against the
greenback declined to a weekly low of 0.9524. The franc is likely
to find support around the 0.97 level.
The franc slipped to 1.1803 against the euro, a level unseen
since January 16. The next possible downside target for the franc
is seen around the 1.20 level.
Survey data from the market research group GfK showed that
German consumer confidence is set to improve in April.
The forward-looking consumer sentiment index rose unexpectedly
by 0.1 point to 10.9 in April. The score was forecast to fall to
10.7.
On the flip side, the franc bounced off to 111.62 against the
yen, from an early 2-day low of 110.92. On the upside, 114.00 is
seen as the next resistance level for the franc.
Switzerland's KOF Economic Institute upgraded its economic
outlook citing improved economic situation of major trading
partners and the depreciation of the Swiss franc against the
euro.
In the Spring Forecast, the think tank said gross domestic
product is forecast to grow 2.5 percent this year instead of 2.3
percent estimated in December.
Looking ahead, U.S. pending home sales for February are
scheduled for release in the New York session.
Euro vs CHF (FX:EURCHF)
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