Franc starts recovering ahead of SNB meeting

Swiss franc rose in European trade on Monday against a basket of major rivals, recovering from two-month low against US dollar on short-covering.

The gains come ahead of the Swiss National Bank's policy meeting on Thursday, expected to raise interest rates by 25 basis points to 2%.

USD/CHF 

USD/CHF fell 0.3% to 0.8949, with a session-high at 0.8977, after closing down 0.25% on Friday, the fourth loss in a row, plumbing a two-month low at 0.8977, as investors buy up the greenback.

Franc lost 0.5% against dollar last week, the ninth weekly loss in a row, and the longest such streak of weekly losses since 2014 amid a widening interest rate gap between the US and Switzerland. 

SNB

The Swiss National Bank is convening next Thursday to discuss policies and latest economic developments. 

Markets widely expect the SNB to increase interest  rates by 25 basis points to 2%, the highest since 2008.

Another SNB rate hike would shrink the interest rate gap with the US and boost investments in the franc.

A surprise decision by the SNB to maintain interest rates would be rooted in recent inflation data, which showed consumer prices fell below 2% in August.