Swiss franc soars after the final SNB interest rate decision

The Swiss franc declined to the lowest level since 2015 after the Swiss National Bank (SNB) delivered its final interest rate decision of the year.  The bank left the interest rate unchanged at -0.75% as most analysts were expecting. It also predicts that the annual inflation rate will drop to -0.70% this year, a worse forecast than the previous -0.6%. Also, the bank expects the economy to drop by 3%, an upgrade from the previous guidance of 3.3%. It also maintained that its currency was highly overvalued even after the outgoing Trump administration designated the country as a currency manipulator. 

The euro was little changed today as traders reacted to the Federal Reserve interest rate decision and weak inflation numbers from Europe. In its statement yesterday, the bank decided to leave interest rates unchanged. It will also continue its asset purchases program in its bid to support the economy. Meanwhile, according to Eurostat, European consumer prices remained under pressure in November. In total, the overall CPI dropped by 0.3% leading to an annualised decline of 0.3%. The core CPI also dropped by 0.5% and rose by a YoY rate of 0.2%.

The British pound rose against the US dollar after the Bank of England (BOE) delivered its final rate decision of the year. The bank voted unanimously to leave its main interest rate unchanged. The members also decided not to tweak the quantitative easing program. This is after the bank raised the ceiling of the purchases to £150 billion last month. In a statement, Governor Andrew Bailey said that the bank stood ready to provide more support if needed. He also warned about the impact of a no-deal Brexit.

USD/CHF

The USD/CHF pair declined to an intraday low of 0.8823 after the SNB interest rate decision. This price is below all moving averages on the four-hour chart. It is also along the lower line of the Bollinger Bands while the Stochastic oscillator has dropped to the oversold level. The Average Directional Index, which is a good measure of a trend’s strength has also started to rise. Therefore, the pair may continue falling as bears aim for the next support at 0.8800.

EUR/USD

The EUR/USD pair is little changed today as traders react to the FOMC decision and EU inflation data. On the four-hour chart, the price remains above the short and longer-term moving averages. Similarly, the Stochastic Oscillator has moved above the overbought level. Also, the price is above the ascending trendline that is shown in yellow. It seems like bulls still have the momentum, which means that the price may continue rising to about 1.2240.

GBP/USD

The GBP/USD pair rallied today after the interest rate decision by the Bank of England. It rose to an intraday high of 1.3595, which is the highest it has been in more than two years. The pair is also above the dots of the Parabolic SAR on the four-hour chart. Oscillators like Relative Strength Index (RSI) and MACD have continued to rise. Therefore, the pair will possibly continue rising, with the next possible target being at 1.3600.