Swiss National Bank, EURCHF Forecasts and Analysis
- The SNB raises rates by more than 75 basis points to 0.50%.
- euro/CHF rallied on possible currency intervention.
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The Swiss National Bank (SNB) raised interest rates by 75 basis points today to bring the official borrowing rate into positive territory for the first time in more than a decade. Financial markets fully priced in a 50bp rise, with commentators tipping for a three-quarters of a percent rise in recent days. The SNB said it could not rule out further rate hikes “to ensure price stability in the medium term,” while the central bank also said it was “ready to be active in the foreign exchange market as needed.”
Now the SNB predicts GDP growth this year by 2%, which is half a percentage point lower than at the last meeting. The Central Bank also noted that inflation, which was 3.5% in August, is likely to remain at an “elevated level” for the time being.
The immediate reaction in the foreign exchange market saw the Swiss franc weaken against the euro, with traders banking on the central bank’s warning that it was ready to be active in the foreign exchange market. Traders with long memories will know not to bet against the SNB.
EUR/CHF Minute Chart, September 22, 2022
Retail trader data shows that 67.74% of traders are net long with a ratio of long to short traders of 2.10 to 1. The number of net long traders is 3.70% lower than yesterday, and 5.32% lower than last week, while the number of net-short traders is 11.05% lower than yesterday and 10.56% lower than last week.
We usually take a contrarian view on crowd sentiment, and the fact that traders are net suggests that EUR/CHF prices may continue to fall. Traders are more net long than yesterday and last week, and the combination of current sentiment and recent changes gives us strengthening of EUR/CHF’s opposite trading bias to the downside.
customers pure long.
customers pure short.
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