Forex News: SNB Will Maintain Franc Ceiling at 1.20 Against the Euro
THE TAKEAWAY: SNB announces it will keep 1.20 Franc ceiling -> Keeps Libor target rate at 0.00% for next 3-months -> Euro falls against the Franc
The Swiss National Bank has announced that is willing to maintain a Franc ceiling of 1.20 against the Euro, and it will defend the Franc ceiling with the utmost determination, meaning it is willing to buy unlimited amounts of foreign currency. Furthermore, the central banks said it is open to taking further action, as the Franc is still too high, thereby possibly implying that it might lower the Franc ceiling to 1.25.
The SNB also announced that it is leaving that Labor target rate range for the next 3-months between 0.00% and 0.25%, as was expected. The central bank also lowered its inflation forecast for 2012 to -0.7% and for 2014 to -0.1%, similar to an earlier forecast released by SECO; the bank expects the economy to expand between 1-1.5% in 2013.
SNB President Jordan said the strength of the Franc could hold back exports in 2013, and added that domestic demand will be restrained over the coming quarters. Much of Jordan’s other comments reflected the comments in the official SNB release.
The Swiss Franc gained significantly against the Euro in forex markets following the SNB release, but it is tough to say what exactly the catalyst for the move was. The SNB’s comments about the Franc ceiling were not particularly stronger than anything said in the past, and the Euro sold off against other currencies at the same time, implying that it could be worries ahead of today’s Euro ministers meeting that pushed the single currency lower. EURCHF is currently trading around 1.2090, and resistance could be provided around a 3-month high of 1.2167, and support could be provided by a support line around 1.2034.
EURCHF Daily: December 13, 2012
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.