US dollar and CHF could be safe havens in the event the turmoil in banks intensify globally
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The SNB decision to hike 50 basis points was expected and the bank reserves the ability to hike again if it feels this will be necessary. This hasn't been read as a significant surprise by the market as yields have eased back lower after the sharp rise of the prior couple of days in the wake of the weekend emergency measures to manage the takeover of troubled Credit Suisse. The USDCHF cross has gyrated since the trouble in the US banking sector broke out so suddenly on March 9th but continues to stay in the range.
The USDCHF cross has gyrated since the trouble in the US banking sector broke out so suddenly on March 9th but continues to stay in the range
This SNB decision doesn't have much bearing on CHF for now, and both the US dollar and CHF could be safe havens in the event the turmoil in banks intensify globally, but the attention on this cross Is likely only to pick up if either the 0.9050 area falls (SNB likely to sell currency to slow CHF strength if that occurs if EURCHF is also lower, i.e., SNB wants to support competitive export sector) or if it rises aback to 0.9400+ (SNB only likely to push back against that with intervention if inflationary pressures are worsening, though more likely that rate moves are more prominent tool on a sharply weaker CHF).
