USD/CHF: SNB is going to be in focus tomorrow – OCBC
11.12.2024, 09:41

USD/CHF: SNB is going to be in focus tomorrow – OCBC

USD/CHF inched higher overnight, tracking broader US Dollar (USD) moves and in anticipation of SNB meeting on Thursday. Pair was last at 0.8848 levels. Last CPI print saw a small uptick to 0.7% for Nov but largely, on trend basis, inflationary pressure has come off significantly from peak of 3.5% in Aug 2023 to 0.6% in Oct 2024, OCBC’s FX analyst Christopher Wong notes.

Risks somewhat skewed to the upside

“Another 25bp cut is likely this Thu though markets have priced in ~50% chance of a jumbo 50bp cut. We will be watching for any SNB surprises on this front, as SNB Chair had said that the SNB will re-introduce negative interest rates if necessary. He added that even though SNB did not like negative rates, SNB could use negative rates as a tool to weaken CHF. So clearly, policymakers are against CHF strength.”

“If the dovish rhetoric remains, then the room for CHF to appreciate may be more restrained (unless USD falls further). Overall, we maintain a mild bearish bias on CHF on the back of dovish SNB, amid ongoing disinflationary pressures. That said, safe-haven characteristic of the CHF may play up in the event of geopolitical risk-offs or during episodes of political uncertainties in Germany, France.”

“Bearish momentum on daily chart is fading while RSI rose. Risks somewhat skewed to the upside. Resistance here at 0.89 (61.8% fibo retracement of 2024 high to low). Support at 0.88, 0.8730 (50 DMA), 0.8640 (100 DMA).”

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