Currency Analysis Report - 9/29/20...Where Is The USD/CHF Headed Next???
Last week, prior to the Swiss National Bank announcing what they were going to do with their interest rate all 31 economists polled by Reuters expected Chairman Thomas Jordan to keep rates on hold. Rates at the time, stood at a negative 0.75%. A negative interest rate means that you have to pay the bank if you deposit money in the bank.
Having a negative an interest rate was a way to weaken the Swiss Franc as it has gained in strength in recent years due to all the issues around the world. However, the Franc safe haven status has outweighed the negative interest rates given the stability of the Swiss government and its financial system.
Switzerland's central bank, the Swiss National Bank, has left the policy rates unchanged at minus 0.75%, maintaining the expansionary monetary policy in its interest rate decision Thursday.
"The coronavirus pandemic continues to exert a strong influence on economic developments. The SNB is therefore maintaining its expansionary monetary policy," SNB said in a statement. "In so doing, it aims to cushion the negative impact of the pandemic on economic activity and inflation."
The bank has left the sight deposits rate unchanged at minus 0.75% as it seeks to stabilize economic activity and price developments in Switzerland.
The central bank left rates on hold because they upgraded the country’s economic forecast. Instead of their GDP shrinking by 6% this year, they now see their GDP shrinking to 5% this year. They also expect the global economy to have a robust recovery in the third quarter now.
So where will the USD/CHF pair headed next, lets go to the charts?
Monthly Chart (Curve Timeframe) – monthly demand is at 0.85000 (in the process of being breached and the monthly supply is 1.02500.
Weekly Chart (Trend Timeframe) – the trend is down.
Daily Chart (Entry) –the chart suggests price will move higher after two months of consolidation.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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