As expected, today, the Swiss National Bank left the deposit rate unchanged at the level of 0.75% and traditionally stated that the Bank would carry out intervention in the foreign exchange market if the need be.
The range for 3-month interest rate LIBOR also remained unchanged (-0.25% to -1.25%). In the accompanying statement, the SNB said that negative interest rate and a statement about possibility of intervention into the currency market by the Bank are aimed at reducing the attractiveness of the Swiss franc, which should ease pressure on the Swiss currency.
After the release of this statement, Swiss franc fell in the currency market. The pair USD/CHF has grown by almost 20 points within an hour, reaching the key resistance level of 0.9760. The SNB traditionally stated in favor of the low exchange rate of the Swiss franc, considering that the national currency is overvalued. The SNB reserves the right to intervene in the currency market in order to decrease excessive demand for the Swiss franc.
The SNB has never notified about the plans to conduct foreign exchange interventions either before or after the intervention. It is obvious that this fact prevents aggressive purchases of the franc by the market participants.
Today’s news will include: at 12:00 GMT+3 European data ( trade balance in Eurozone for July and consumer price index in the Eurozone for August; at 14:00 GMT+3 interest rate decision of the Bank of England; at 15:30 and 16:15 US statistics on retail sales, producer price index, Philadelphia Fed business activity index in the manufacturing sector and weekly data on the number of applications for unemployment benefits, industrial production and capacity utilization for August.
It is expected that volatility will be extremely high in the pairs with the USD, including USD/CHF.