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EUR/CHF: On the eve of the meeting of the National Bank of Switzerland

20 June 2023, 14:11

Yuri Papshev

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The next meeting of the SNB, dedicated to the issues of monetary policy, will be held this Thursday, and economists predict a continuation of the "hawkish" course of monetary policy and an increase in the interest rate by 25 bp to 1.75%.

At the same time, there is an opinion of economists that the SNB interest rate will remain unchanged at 1.50%, although at the June 22 meeting, the bank's leaders may signal a tendency to further increase at the next meetings if the economic situation suits this.

The limiting factor, in addition to the still declining inflation, is other macro data. Overall, the Swiss economy is showing resilience in the face of the global slowdown and high inflation in other parts of the world economy.

But there are also some negative points.

Headline inflation in Switzerland has remained above the central bank's target range of 0.0% - 2.0% since February 2022, but well below those in other industrialized countries and the Eurozone.

In addition, the statistics on core inflation presented earlier indicated a decline in the indicator to 1.9%, i.е. below the target range set by the Swiss National Bank, and the State Secretariat for Economic Affairs (SECO) reported that the country registered 88,076 thousand unemployed in May, while unemployment rose by 0.1% to 2.0% (at a value of 1.9% in the previous 5 months).

Thus, the intrigue about the results of the SNB meeting this Thursday remains, and many economists, despite the market's expectations of an increase in interest rates, believe that against the backdrop of the effectiveness of the monetary policy pursued in the country, the Swiss Central Bank may suspend the tightening cycle. This may be the reason for the resumption of the weakening of the franc and the growth of the EUR/CHF pair, especially after the recent (last week) ECB meeting, at which the leaders of the Eurozone Central Bank raised key interest rates by 25 basis points, to 4.00% and 3.50 %. The ECB also signaled the possibility of further growth, although the decision on this will be based on the situation in the economy.

As a reminder, the decision of the SNB on the interest rate will be published on Thursday at 07:30 (GMT).

Support levels: 0.9800, 0.9770, 0.9760, 0.9758, 0.9700, 0.9675

Resistance levels: 0.9830, 0.9870, 0.9895, 0.9900, 0.9970, 1.0000, 1.0100, 1.0200, 1.0240, 1.0300, 1.0395, 1.0400