The Swiss National Bank (SNB) jacked up interest rates by 75 basis points today to take the official borrowing rate into positive territory for the first time in over a decade. Get your market update from nickcawley1 here:
The Swiss National Bank jacked up interest rates by 75 basis points today to take the official borrowing rate into positive territory for the first time in over a decade. Financial markets had fully priced in a 50bp increase with commentators leaning toward a three-quarters-of-a-percent-rise in recent days.
The SNB now anticipates GDP growth of 2% this year, half a percentage point lower than at the last meeting. The central bank also noted that inflation, 3.5% in August, is likely to remain at an ‘elevated level’ for the time being. The immediate reaction in the FX market saw the Swiss Franc weaken against the Euro with traders leaning on the central bank’s warning that it is willing to be active in the FX market. Traders with long memories will know not to bet against the SNB.Retail trader data shows 67.74% of traders are net-long with the ratio of traders long to short at 2.10 to 1. The number of traders net-long is 3.70% lower than yesterday and 5.32% lower from last week, while the number of traders net-short is 11.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggest EUR/CHF prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a
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