2024.03.2111:56:00UTC+00Swiss Franc Slides As Swiss Central Bank Makes Surprise Rate Cut

The Swiss franc weakened against other major currencies in the European session on Thursday, after the Swiss National Bank lowered its policy rate by a quarter-point, as the fight against inflation over the last two and a half years has been effective.

The SNB unexpectedly lowered the policy rate by 25 basis points to 1.5 percent. Markets expected the bank to keep the rate unchanged.

The central bank said it remains willing to be active in the foreign exchange market as necessary.

The policy rate cut supports economic activity and today's easing ensures that monetary conditions remain appropriate, the bank said.

"The SNB will continue to monitor the development of inflation closely and will adjust its monetary policy again if necessary to ensure inflation remains within the range consistent with price stability over the medium term," the bank said.

Moreover, the European stock markets traded higher after dovish Fed comments suggesting that the U.S. central bank remains on track to cut interest rates three times in 2024.

Investors also awaited a rate decision from the Bank of England later in the day for additional clarity on when it would start cutting interest rates.

In the Asian session today, the Swiss franc held steady against its major rivals.

In the European trading now, the Swiss franc fell to an 8-1/2-month low of 0.9783 against the euro and 1.1459 against the pound, from early highs of 0.9667 and 1.1312, respectively. If the franc extends its downtrend, it is likely to find support around 1.00 against the euro and 1.15 against the pound.

Against the U.S. dollar and the yen, the franc dropped to more than a 4-month low of 0.8975 and a 2-day low of 168.52 from an early 3-day high of 0.8839 and a 3-week high of 170.81, respectively. The franc may test support near 0.91 against the greenback and 166.00 against the yen.

Looking ahead, the Bank of England releases the monetary policy summary and minutes of the monetary policy committee meeting at 8:00 am ET. The bank is widely expected to maintain the benchmark rate at 5.25 percent but to keep hawkish guidance.

In the New York session, U.S. Canada new housing price index for February, U.S. weekly jobless claims, U.S.PMI data for March and U.S. current account data for the fourth quarter are slated for release.