Swiss National Bank Surprises Market with Rate Cut

Early this morning the Swiss National Bank cut its key interest rate this morning. The recession in the Euro Zone has weakened the Swiss economy to the point where the policymakers felt it was necessary to lower rates in an effort to stimulate the economy.

Early this morning the Swiss National Bank cut its key interest rate this morning. The recession in the Euro Zone has weakened the Swiss economy to the point where the policymakers felt it was necessary to lower rates in an effort to stimulate the economy. Expectations are for the Swiss economy to continue to weaken further due to mounting pressure from the Euro Zone and Eastern European emerging markets.

 

Earlier in the week the Swiss National Bank went on record stating that the U.S. Dollar is the new safe-haven. This comment is helping to accelerate the USD CHF to the upside. Technical factors are also supporting the long side of the Dollar versus the Swiss Franc. Look for the strong uptrend which began in March to continue with a move to 1.30 over the near term likely.