The Swiss National Bank (SNB) could be moving forward in their process of raising interest rates according to current reports with the previous Q4 2019 hike predicted to become reality in Q3. This minor shift in expectations is positive for the Swiss Franc and gives the market some news to be targetting and assessing in deciding the value of the CHF.
With interest rates in Switzerland having been at -0.75% since January 2015, the future guidance could see the Franc strengthening as investors price up the possibility of increased returns. The main reason for cutting rates so low had been to weaken the currency which in the aftermath of the financial crisis and Eurozone instability, had been strengthening dramatically undermining the Swiss economy.
This news should become more of a topic on the Franc and with global growth continuing to rise, the chances of this happening may rise too. Yesterday Eurozone GDP was confirmed at 2.5% year on year yesterday for Q1, this has helped cement the overall positive impression of Switzerland’s largest trading partner.
When considering future trends on the Franc it is also important to remember the status of the currency as a ‘safe haven’ asset. This means in times of uncertainty the CHF is bought to guard against uncertainty elsewhere. Key news which may influence this behaviour is the latest developments over North Korea, reports overnight suggest a breakdown in the more positive mood which had seen the Franc weaker.
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