Franc is best performing major currency after Swiss data

Swiss Franc rallied in European trade on Thursday, extending gains for the second straight day against the dollar away from seven-month lows and becoming the best performing major currency following Swiss inflation data.

The data reignited inflationary pressures on the Swiss National Bank, which might force the central bank to hold off easing policies. 

The Price

USD/CHF fell 0.7% today to 0.9095, with a session-high at 0.9174, after closing up 0.4% on Wednesday away from recent seven-month lows at 0.9224. 

The franc also rebounded against the dollar after the bearish policy meeting by the Federal Reserve this week. 

Winning Currencies 

Franc became the best performing major currency today, with a 0.7% gain against the dollar, and a 0.6% profit against the euro and the pound, and a 1.1% profit against the yen, and a 0.5% gain against the Canadian dollar. 

Swiss Inflation

Earlier government data showed consumer prices rose 1.4% y/y in Switzerland in April, above estimates of 1.1%. 

On a monthly basis, consumer prices rose 0.3%, above estimates of 0.1%. 

The data heaped pressure on SNB’s policymakers and hurt the odds of new interest rate cuts this year.

Global Inflation 

The recent inflation data in the UK and the US stoked concerns that inflation is rising once more worldwide.

The Swiss National Bank intervened multiple times into the forex market in recent months to stabilize the franc against major currencies while bringing inflation below the 2% target.  

SNB

The SNB announced a 0.25% interest rate cut at its March policy meeting to 1.5%, surprising markets which expected no change in policies. 

The surprise decision made the SNB the first major central bank that backed off policy tightening, as inflation declined markedly. 

The SNB noted that inflation has reliably fallen below 2% for multiple months, indicating stable prices for the next few years. 

Swiss Rates

However, after recent inflation data showed some troubles, the SNB isn’t likely to issue another interest rate cut in the summer.