Global macro overview for 15/06/2017:
The Swiss National Bank has maintained the interest rate at the level of -0.75% as expected. In the Monetary Policy Assesment issued after the decision, the SNB said, that the franc is still significantly overvalued and that it would remain active in the foreign exchange market as necessary (which is basically the same rhetoric as seen at the previous meetings). The negative interest rates and the ability to intervene in the financial markets are in the mandate of the SNB as it continues to achieve price stability and make the franc less overvalued.
At the press conference, SNB Chairman Thomas Jordan reiterated, that the inflation remains very low and inflation expectations are in the range that is consistent with SNB definition of price stability. The SNB inflation forecast was unchanged at 0.3% while the 2018 forecast was cut slightly from 0.4% to 0.3%. Nevertheless, according to Jordan, the franc is still subject to higher upward pressure. This is why the SNB will continue to monitor closely current developments on financial markets across the globe. The main focus will still be on the ECB policy actions and the SNB will be looking for a tapering of ECB bond purchases in order to ease upward pressure on the Swiss currency. Until there is any significant shift by the ECB, the National Bank will have very little room for adjustments.
In conclusion, the good old SNB rhetoric did not change much the situation as it still sees the Swiss franc undervalued. This is why the risk of the SNB market intervention is always present, especially if there will be even a clue from the ECB regarding a possible change in the monetary policy.
Let's now take a look at the USD/CHF technical picture on the daily time frame. The interest rate decision did now make any impression on the market, not that much as yesterday's FOMC interest rate hike. The price bounced from the support at the level of 0.9641 and now is heading towards the next technical resistance at the level of 0.9811.
