Franc sharpens decline to two-week trough on weak demand

Swiss Franc fell in European trade against a basket of major rivals, sharpening losses for the fifth straight session against US dollar and plumbing a two-week trough on weak demand on the Swiss currency.

It's unlikely the Swiss National Bank will raise interest rates at the December meeting as inflation declined below the 2% target. 

USD/CHF

USD/CHF rose 0.2% today to 0.9040, the highest since October 16, with a session-low at 0.9003, after falling 0.4% on Friday, marking the third loss in a row following a stream of positive US data.

Franc lost 1.1% against the dollar last week, the first weekly loss in a month amid renewed concerns about US-Swiss interest rate differences. 

Interest Rate Gap

The current US-Switzerland interest rate gap stands at 375 basis points, underpinning dollar's standing against the franc.

The gap could grow even further amid speculation about another 0.25% interest rate hike by the Federal Reserve later this year. 

Swiss Rates

Current Swiss interest rates stand at 1.75%, the highest since 2008, and will likely remain so through 2024. 

Swiss consumer prices recently fell below 2%, reducing pressures on the SNB. 

The SNB recently said that recent aggressive policy tightening continues to constrain inflationary pressures.