Ella 
In Asia on Thursday, before the Swiss National Bank (SNB) announced its interest rate decision, USD/CHF continued to fall for the fourth consecutive trading day, trading around 0.8670. Most economists polled by Reuters expect the SNB to keep its key interest rate on hold until at least the third quarter of next year.
Although price pressures have eased slightly, Swiss average inflation rates are expected to be 1.5% and 1.3% in 2024 and 2025 respectively, down from 2.2% this year. Another Reuters poll showed that the SNB would consider cutting interest rates following a rate cut if the above survey predictions come true.
However, despite the downward trend in inflation, SNB Chairman Thomas Jordan expressed his preference for further tightening of monetary policy if deemed necessary.
The Swiss National Bank’s commitment to maintaining higher interest rates over the long term could help the Swiss franc strengthen against the dollar. Meanwhile, the Federal Reserve decided to keep interest rates on hold at 5.5% on Tuesday, as expected, and weighed on USD/CHF.
Additionally, the Fed’s “dot plot” showed a significant change in its 2024 interest rate forecast, falling 50 basis points from 5.1% to 4.6%. This change indicates that more loose monetary policy may be introduced in the future.
The weak producer price index in November added to the overall pressure on USD/CHF. Focus will turn to U.S. retail sales data to be released late in the U.S. session.
