As expected, last Thursday, the Swiss National Bank left the Deposit rate at the level of -0.75%. The range of 3-month interest rate LIBOR also remained unchanged (-0.25% to -1.25%). the SNB’s statements said that negative interest rate and a statement of the Central Bank about readiness to intervene in the currency market in order to reduce attractiveness of the Swiss franc, which should ease the pressure on frank. The Swiss currency hardly reacted to this decision. Last Friday, the pair USD/CHF rose sharply due to the strengthening in the USD in the currency market.
AS it became known last Friday, US consumer price index (CPI) in August rose by 0.2%against the forecast of 0.1%, which increased possibility of the interest rate hike by the Fed in the near future. On annual terms, the index amounted to 1.1% against the forecast of +1.0%.
Today a two-day meeting of the US Fed will begin and tomorrow at 21:00 (GMT+3) interest rate decision will be published. Now, probability of the rate increase is 12%. Probability of the rate hike in December is estimated at 55%.Trading on the foreign exchange market unstable and sluggish, trading volumes are low. Traders refrain from active trading ahead of the meetings of three Central Banks in Japan, USA and New Zealand.
The meetings will be held in tomorrow at 06:00, 21:00 and 24:00 (GMT+3) respectively.
Swiss data on foreign trade balance for August was released today. Positive balance in August amounted to 3.025 billion francs, which is slightly higher than in July (2.806 billion). The Data suggests that the foreign trade of Switzerland has successfully withstood the impact of the strong Swiss franc last month. The Swiss franc is growing against the USD today. However, it is likely that the pair USD/CHF will trade in the range of 0.9820 and 0.9760 until 21:00 (GMT+3) on Wednesday.
Further movement in the pair will depend entirely on the decisions and comments made by the US Fed. Today’s US news can increase volatility in the pair. At 15:30 (GMT+3) data on the number of new homes constructions and permits to construct for August will be published. These indices are important indicators of the situation in the housing market in the United States. Usually, they increase volatility to in the currency market.