Global macro overview for 14/09/2017:
The Swiss National Bank (SNB) leaves the interest rated unchanged at the level of -0.75% as expected. In the Monetary Policy Statement, SNB said that the Swiss Franc remains highly valued and the situation on FX market is still fragile. The SNB will remain active in the currency market while taking the overall currency situation into consideration. Moreover, SNB will continue to monitor the situation in mortgage and property markets as imbalances on mortgage and real estate markets persist.
In the statement the bank changed its assessment of the Franc's position, which is no longer "significantly overvalued", but "remains highly valued". This is an important change in the rhetoric as the SNB is trying to prevent the Franc appreciation in order to "reduce the attractiveness of Swiss Franc investments and thus ease pressure on the currency." The SNB conditional inflation forecast has been slightly revised upwards compared to June statement. For the current year, the forecast has risen marginally to 0.4%, from 0.3% in the previous quarter. For 2018, too, the SNB anticipates an inflation rate of 0.4% compared to 0.3% last quarter. For 2019, it now expects inflation of 1.1% compared to 1.0% last quarter.
In conclusion, the SNB is following the path of the ECB as it is hesitating yet to hike the interest rate from the negative territory to the positive one despite the mounting inflationary pressures and renewed higher projections. Nevertheless, as soon as the ECB will finally hike the interest rate or become more hawkish in the statements, then the SNB will definitely follow, causing a massive Franc's appreciation.
Let's now take a look at the EUR/CHF technical picture on the H4 time frame. The market reaction to the interest rate decision is limited so far, but the price of EUR/CHF is moving north. Nevertheless, the market is still trading inside of the range zone between the levels of 1.1255 - 1.1538 with the momentum indicator hovering around its fifty level. As long as any of the important levels are not violated, the price remains range bound.
