USDCHF Analysis – The Swiss franc recently rose beyond 0.87 per USD, marking its strongest position since late July. This was largely due to a temporary dip in the dollar’s strength and consistent backing from the Swiss National Bank. The Federal Reserve’s recent meeting, which hinted at potential rate cuts next year, further weakened the dollar. Meanwhile, the Swiss National Bank has been actively bolstering the franc by selling off foreign currency reserves.
This strategy helps mitigate the impact of fluctuating commodity prices and curb import inflation, a crucial tactic in combating Europe’s high price growth. Recent data reveals that the SNB’s foreign exchange reserves have been decreasing for six consecutive months, reaching a seven-year low in November. Despite this, the central bank maintained its key rate last week, acknowledging that inflation risks persist even with the country’s slowing CPI.