The Swiss franc is lower on Thursday. Early in the North American session, USD/CHF is trading at 0.9050, up 0.24%. It has been a bumpy year for the Swiss franc, which is down 7.7% against the US dollar and is trading at its lowest level since November.

Switzerland’s inflation rate eases to 1%

Switzerland is the envy of most major economies, with a very low inflation rate. Inflation rose by just 1% y/y in March, down from 1.2% and below the market estimate of 1.3%. This was the lowest level since September 2021.

Inflation has stayed within the Swiss National Bank’s target of 0-2% for ten straight months and policy makers at the central bank can give themselves a pat on the back for a job well done. The SNB had embarked on a rate hike-cycle in order to prevent inflation from breaching the upper band of the target, but with inflation now falling, there is the concern that inflation could fall too low, which could lead to deflation.

The SNB trimmed rates in March by quarter-point, the first major central bank to lower rates. This brought the SNB’s key rate to 1.5%. The SNB meets every quarter, and today’s inflation report has raised expectations that another cut is coming at the June meeting.

In the US, unemployment claims were higher than expected, at 221,000 last week. This was higher than the previous reading, which was revised to 212,000 and beat the market estimate of 214,000. The nonfarm payrolls report, a critical indicator, will be published on Friday. The market estimate stands at 200,000 for March, compared to 275,000 a month earlier.

USD/CHF Technical

• USD/CHF tested resistance at 0.9074 earlier. Above, there is resistance at 0.9119
• 0.9050 and 0.9005 are providing support

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