Swiss Franc Trades Lower As SNB Keeps Rate Steady Unexpectedly

(RTTNews) - The Swiss franc traded lower against its most major counterparts in the European session on Thursday, as the Swiss National Bank surprised markets by keeping interest rates unchanged.

The SNB Governing Board, chaired by Thomas Jordan, decided to hold the policy rate at 1.75 percent, while markets expected a final quarter-point hike.

The central bank said it cannot be ruled out that a further tightening of monetary policy may become necessary to ensure price stability over the medium term. The bank said it will monitor the development of inflation closely in the coming months.

The bank reiterated that it is willing to be active in the foreign exchange market as necessary.

Sight deposits held at the central bank will continue to be remunerated at the SNB policy rate of 1.75 percent up to a certain threshold, the bank said. Deposits above this threshold will be remunerated at an interest rate of 1.25 percent.

The franc fell to more than a 3-month low of 0.9078 against the greenback and a 1-1/2-month low of 162.97 against the yen, off its early highs of 0.8979 and 165.05, respectively. The franc is poised to challenge support around 0.92 against the greenback and 140.00 against the yen.

The franc weakened to more than a 2-month low of 0.9677 against the euro, from an early 3-day high of 0.9563. The currency is likely to face support around the 0.98 level.

In contrast, the franc recovered to 1.1083 against the pound, from an early 9-day low of 1.1167. This may be compared to its previous 1-/2-month high of 1.1067. Next key resistance for the currency may be located around the 1.09 level.