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Swiss franc outlook: CHF to rally on higher SNB interest-rate hikes?

By Piero Cingari

15:48, 14 November 2022

swiss franc banknotes
Collection of the new swiss banknotes (issued in 2017) – Photo: Shutterstock

The Swiss franc (CHF) has been the best-performing major currency so far in November, with most of the gains occurring in the past week due to a confluence of factors including weaker-than-expected US inflation numbers and hawkish comments from Swiss National Bank (SNB).

The US inflation rate fell from 8.2% in September to 7.7% in October, which was less than what the market expected (8%). This has prompted market players to cut their Fed hike forecasts to 50 basis points in December, and to price in a lower terminal rate of 4.85% in May 2023, weighing on the dollar broadly.

But on Friday, November 11, a favourable franc-specific catalyst materialised. SNB Governor Thomas Jordan stated that the Bank is ready to take “all measures necessary” to bring inflation back to the 0-2% target. Additionally, he suggested his readiness to sell foreign exchange reserves, arguing that the policy stance should become more restrictive than it is today. The CHF rallied against all major peers, gaining 2.3% on the day vis-à-vis the greenback and snapping a six-day winning streak. 

In the first half of November, the Swiss franc strengthened 5.9% versus the US dollar (USD), 3.8% versus the British pound (GBP), 3.4% versus the Canadian dollar (CAD), 1.4% versus the euro (EUR), 1.2% versus the New Zealand dollar (NZD), 1.2% versus the Australian dollar (AUD), and remained unchanged versus the Japanese yen (JPY).

Swiss franc (CHF) has been the best-performing major currency so far in November

Swiss franc's performance in November (1-14) 2022 – Photo:, Source: Tradingview

Switzerland interest rate forecasts: Higher on hawkish SNB?

At its meeting in September, the SNB increased its policy rate by 75 basis points to 0.5%, marking the first time since 2011 that interest rates were not in the negative region.

The latest statistics showed an annual inflation rate of 3% in October, significantly below central bank predictions of 3.4% and market forecasts of 3.2%. This was also the second straight dip in inflation from the three-decade peak of 3.5% hit in August.

Though it was the lowest inflation figure since May, this was still above the Swiss National Bank's 0-2 percent goal range. Meanwhile, October's jobless rate of 1.9% was also better than expected, and it continued to hover near a 21-year low.

Above-target inflation and a tight labour market should keep the SNB on a restrictive stance for the foreseeable future. Recent comments by SNB Governor Thomas Jordan also indicate that the market may underestimate the impact of impending rate hikes in Switzerland. 

The next meeting of the SNB is set for December 21, and the market is currently pricing in a 46-basis-point increase. If the SNB steers the market toward a greater 75 basis point shift in December, this hawkish repricing could cause the Swiss franc to strengthen further.

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1.09 Price
-0.100% 1D Chg, %
Long position overnight fee -0.0087%
Short position overnight fee 0.0005%
Overnight fee time 21:00 (UTC)
Spread 0.00018


157.52 Price
+0.080% 1D Chg, %
Long position overnight fee 0.0108%
Short position overnight fee -0.0190%
Overnight fee time 21:00 (UTC)
Spread 0.040


0.67 Price
-0.330% 1D Chg, %
Long position overnight fee -0.0066%
Short position overnight fee -0.0016%
Overnight fee time 21:00 (UTC)
Spread 0.00030


0.67 Price
-0.330% 1D Chg, %
Long position overnight fee -0.0066%
Short position overnight fee -0.0016%
Overnight fee time 21:00 (UTC)
Spread 0.00030
Switzerland inflation rate and interest rate – Photo:, Source: Tradingview

Swiss franc-gold positive correlation resumes

Correlation between Swiss franc (CHF) and gold – Photo:, Source: Tradingview

The longstanding positive correlation between the Swiss franc (CHF) and the price of gold has strengthened again over the past three months. 

The chart above shows the USD/CHF pair on the right-hand side and the inverted price of gold on the left. Recently, the two variables have been highly and positively connected, implying that a strengthening (weakening) in the USD/CHF pair corresponded to stronger (weaker) gold prices.

Since November 3 and up to November 14, the USD/CHF pair has fallen by 7%, from 1.0135 to 0.943, while gold has gone up by 9.5%, from 1,620/oz to 1,770/oz.

So far, this movement has likely been mainly triggered by a hit in the dollar sentiment, but signs of growth/inflation slowdown and a Fed hawkishness peak could perhaps fuel the bullish momentum on gold and the franc.

Swiss franc (USD/CHF) technical analysis: Trend reversal

USD/CHF technical analysis – Photo:, Source: Tradingview

The USD/CHF pair experienced a very violent shift over the past week, falling 5.5% from 0.997 to 0.941 as of the close of trading on Friday.

The price action destroyed both the 50-day and 200-day moving averages, and the 14-day RSI oscillator reached oversold conditions for the first time since May 2021.

Oversold RSI conditions are causing some bottom picking in USD/CHF, although the bullish trend appears to have been decisively broken over the past week.

A bullish effort to break through 0.95 was already thwarted by bearish momentum at 0.9485. (September lows).

The pair is currently trying to establish support at the August lows. The next significant price supports are 0.9286 (12 April low) and then 0.9191 (March 31 low) if the 11 August low of 0.9370 is breached. 

Markets in this article

0.59443 USD
-0.00108 -0.180%
0.64771 USD
-0.0003 -0.050%
177.204 USD
-0.167 -0.090%
1.14817 USD
-0.00135 -0.120%
0.53436 USD
-0.00238 -0.440%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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