Swissie takes a pause after busy week

The Swiss franc is unchanged on Friday, trading at 0.9132. USD/CHF has posted sharp swings over the past several days and is down 0.80% this week.

Swiss releases have been a mixed bag this week. The KOF Economic Barometer rose to 97.2, up sharply from 91.5 and above the consensus of 93.3 points. This is an important sign that the economic recovery is strengthening. However, retail sales fell by 2.8%, down from -1.4% and Manufacturing PMI dropped from 54.1 to 49.3, which indicates a contraction. Consumer climate remains in negative territory, although it did rise to -9, up from -38 points.

Jordan signals a rate hike in March

Swiss National Bank President Jordan said on Thursday that inflation is above the level of “price stability” and the SNB is focused on limiting the effects of inflation. Jordan said that further interest rate hikes were on the table in order to keep inflation in check. Jordan also said that the SNB would intervene in the currency markets if necessary. Inflation climbed 2.8% in 2022, which is low compared to other major economies but above the SNB’s target of 2%. The SNB was busy last year, raising rates out of negative territory to 1%. The next meeting isn’t until Mar. 23, with a 57% probability of a 25-bp hike and a 43% probability of a 50-bp increase.

The Fed has relied on a strong labour market to enable it to continue raising rates, and today’s US job report could be a market-mover. Nonfarm payrolls fell from 256,000 to 223,000 in December and the downturn is expected to continue, with an estimate of 190,000 for January. The ADP payroll report showed a decline in December, but unemployment claims and JOLT job openings both moved higher, so this week’s employment releases have been mixed. The markets will also be keeping a close look at hourly earnings and the unemployment rate.

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USD/CHF Technical

• USD/CHF tested resistance at 0.9153 earlier today. Above, 0.9219 is the next resistance line
• 0.9027 and 0.8894 are the next support lines