Investing.com – The U.S. dollar jumped more than 7% against the Swiss franc on Tuesday, after Switzerland’s central bank intervened in currency markets to curb the strong franc, saying the strength of the currency posed a threat to the economy.
USD/CHF hit 0.8500 during European morning trade, the pair’s highest since July 7; the pair subsequently consolidated at 0.8486, leaping 7.81%.
The pair was likely to find support at 0.8281, the low of July 12 and short-term resistance at 0.8550, the high of June 15.
The Swiss National Bank announced that it had set a minimum exchange rate target of 1.20 per euro for the Swiss franc, saying the massive overvaluation of the currency posed an acute threat to the Swiss economy and carried a risk of deflation.
The central bank said it was prepared to enforce this minimum rate with the utmost determination by purchasing foreign currency in unlimited quantities.
The announcement came after official data showed that Swiss consumer price inflation fell 0.3% in August, after dropping by 0.8% the previous month, surpassing expectations for a 0.2% decline.
The Swissie was also sharply higher against the euro, with EUR/CHF jumping 8.37% to hit 1.2026.
The SNB intervention came after the Swiss government issued a statement late last week declaring that all federal parties stood behind the central bank’s actions and asserting that the central bank was solely responsible for currency policy.
USD/CHF hit 0.8500 during European morning trade, the pair’s highest since July 7; the pair subsequently consolidated at 0.8486, leaping 7.81%.
The pair was likely to find support at 0.8281, the low of July 12 and short-term resistance at 0.8550, the high of June 15.
The Swiss National Bank announced that it had set a minimum exchange rate target of 1.20 per euro for the Swiss franc, saying the massive overvaluation of the currency posed an acute threat to the Swiss economy and carried a risk of deflation.
The central bank said it was prepared to enforce this minimum rate with the utmost determination by purchasing foreign currency in unlimited quantities.
The announcement came after official data showed that Swiss consumer price inflation fell 0.3% in August, after dropping by 0.8% the previous month, surpassing expectations for a 0.2% decline.
The Swissie was also sharply higher against the euro, with EUR/CHF jumping 8.37% to hit 1.2026.
The SNB intervention came after the Swiss government issued a statement late last week declaring that all federal parties stood behind the central bank’s actions and asserting that the central bank was solely responsible for currency policy.