Swiss Franc Drops Despite SNB Rate Hike

(RTTNews) - The Swiss franc fell against its major counterparts in the European session on Thursday, after the Swiss National Bank hiked its policy rate by 75 basis points, as anticipated.

The central bank hiked the SNB policy rate by 0.75 percentage points to 0.5 percent. This was the second consecutive rate hike.

"It cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term," the bank said in the statement.

To provide appropriate monetary conditions, the SNB is also willing to be active in the foreign exchange market as necessary, the SNB added.

The inflation projection for this year was raised to 3.0 percent from 2.8 percent. The outlook for 2023 was lifted to 2.4 percent from 1.9 percent and that for 2024 to 1.7 percent from 1.6 percent.

European markets dropped as the U.S. Federal Reserve signalled more aggressive rate increases despite growing headwinds to economic growth and the labor market.

The franc dropped to a fresh 2-week low of 0.9800 against the greenback, after rising to 0.9620 at 3:15 am ET. The franc may face support around the 1.00 level, if it falls again.

The franc depreciated to a 1-week low of 1.1098 against the pound, from near a 48-year high of 1.0814 seen at 3:15 am ET. The franc is seen finding support around the 1.23 area.

The franc slipped to a 2-day low of 0.9681 against the euro, following a record high of 0.9465 set at 3:15 am ET. Next key support for the franc is likely seen around the 0.98 level.

The franc weakened to more than a 2-week low of 144.34 against the yen, down from a 42-1/2-year high of 151.47 hit at 3:15 am ET. Should the franc falls further, it is likely to test support around the 131.00 region.

Looking ahead, the Bank of England's monetary policy announcement is due at 7:00 am ET. The BoE is widely expected to raise its key rate by 50 basis points to 2.25 percent from 1.75 percent.

Canada new housing price index for August, U.S. weekly jobless claims for the week ended September 17 and leading index for August will be featured in the New York session.

At 10:00 am ET, Eurozone flash consumer sentiment index for September is due.