Negative SNB Undermines Franc

Daily Forex Fundamentals | Written by Investica | Dec 11 08 11:51 GMT |

The very negative National Bank assessment of conditions will maintain a lack of confidence in the Swiss economy and currency. The Swiss currency found support on dips towards 1.21 against the dollar on Wednesday and strengthened through the 1.20 level as the US currency had a generally weaker tone. The franc also found some support weaker than the 1.56 level against the Euro. At Thursday's policy meting, the National Bank cut interest rates by 0.50% to a band of 0.0 - 1.0% with a central rate of 0.50% which was in line with market expectations. The bank downgraded its outlook for 2009, forecasting that the economy would contract for the year, and it took a notably pessimistic stance towards the economy as a whole. The bank stated that it may have to consider alternative quantative measures to support the economy while the weakening of the franc was a deliberate policy. In response to the bank's comments, the franc weakened to beyond 1.57 against the Euro while the advance against the dollar stalled. Investica http://www.investica.co.uk Disclaimer: Investica's market analysis is not investment advice and must not be taken as recommending particular market positions. Investica can take no responsibility for any actions taken by investors.