The SNB keeps policy on hold, as expected. The central bank confirmed its expansionary policy, with interest on sight deposits unchanged at -0.75% and the mid point Libor target also at -0.75%. At the same time the central bank confirmed its commitment to “remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration”. The CHF remains “significantly overvalued”, according to the central bank. The updated set of forecasts, cut the inflation projections for 2018 and 2018 by 0.1 percentage points to just 0.3% and 1.0% respectively. And while the SNB acknowledged that the global economy strengthened further and the new baseline scenario “anticipates that economic developments will remain favourable”. At the same time though the central bank highlights “considerable downside risks”, due to political uncertainty and structural problems. The growth forecast for Switzerland was left unchanged at “roughly” 1.5%. No major surprises there and the SNB is widely seen on hold for the reminder of the year and wide into 2018. My long position on the USDCHF from Monday (June 12) hit target 1 for a gain of 50 pips and remains well bid this morning. Target 2 is 0.9800.
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