Anna 
During the early European session on Friday, the USD/CHF pair gained momentum, breaching the psychological barrier of 0.9000. The Swiss Franc (CHF) experienced selling pressure following a surprise decision by the Swiss National Bank (SNB) to cut its main interest rate by 25 basis points (bps) to 1.50% on Thursday. As of press time, USD/CHF is trading at 0.8990, reflecting a 0.15% increase on the day.
The SNB’s move to lower interest rates from 1.75% to 1.50% marks a significant shift, making it the first central bank to declare victory over inflation. SNB Chairman Thomas Jordan noted that the effectiveness of the measures taken against inflation allowed for the easing of monetary policy. This decision follows Swiss inflation figures for February, which remained below the SNB’s 0-2% target range at 1.2%. The unexpected rate cut from the SNB has consequently exerted downward pressure on the CHF and provided support for the USD/CHF pair.
In contrast, the US Federal Reserve (Fed) opted to maintain its benchmark interest rate unchanged during its Wednesday meeting but maintained its projection for three rate cuts this year. Fed Chair Jerome Powell emphasized that despite upside surprises in US inflation data for January and February, the overall narrative remains that inflation is gradually returning to its 2% target amid some fluctuations.
Thursday’s data revealed a mixed picture, with the US S&P Global Manufacturing PMI exceeding expectations by rising to 52.5 in March from 52.2 in February. However, the Services PMI moderated to 51.7 in March from 52.3 in February, slightly below the estimated 52.0. The Composite PMI for March came in at 52.2, compared to the previous reading of 52.5.
Investors are eagerly awaiting Fed Chair Jerome Powell’s speech on Friday, which is anticipated to provide insights into the inflation and monetary policy outlook. Looking ahead to next week, market participants will closely monitor the release of the Swiss ZEW Survey for March and the SNB Quarterly Bulletin for the first quarter (Q1) of 2024, alongside the US Gross Domestic Product Annualized (GDP) for Q4.
