The Swiss central bank has lowered interest rates again.

The Swiss franc has weakened once more after the Swiss central bank decided to cut the interest rate by 25bps, a primary factor directly impacting the currency. Meanwhile, the U.S. Federal Reserve has no immediate plans to cut interest rates due to ongoing economic activities, leading investors to predict that the Fed will only cut rates twice this year.

The Swiss investor confidence index fell by 0.7 points from the previous month to 17.5 in May, according to UBS data, reflecting domestic concerns about the upcoming elections in France and the U.S. presidential election later this year. Additionally, there are worries about domestic economic growth. Meanwhile, investors expect the Swiss franc to strengthen further against the U.S. dollar, which may weaken following the Fed's interest rate cuts.

The Swiss central bank lowered the policy rate by 25 bps to 1.25% in June, aligning with market expectations due to decreasing core inflation pressures and the strengthening Swiss franc. This rate cut aims to prevent the franc from becoming too strong, which could negatively impact exports. The Swiss central bank's new inflation forecast predicts that inflation will fall to 1.3% in 2024, 1.1% in 2025, and 1.0% in 2026. Additionally, the central bank forecasts moderate GDP growth of 1% in 2024, with a slight increase in unemployment.

Inflation in Switzerland was 1.4% year-on-year in May, stable compared to the previous month. Most of the inflation increase came from housing, which rose to 3.8% in April, while transportation costs increased again by 0.7% after stabilizing the previous month, causing a slight rise in prices of various goods. Core inflation, excluding volatile food and energy prices, increased by 1.2%, remaining stable from the previous month.

Swiss unemployment stood at 2.3% in May, matching market expectations, with the number of unemployed decreasing by 1,492 from the previous month to 105,465. Meanwhile, the youth unemployment rate, for those aged 15 to 24, remained steady at 2.0%.

The yield on Swiss 10-year government bonds continued to fall to 0.61% after the Swiss central bank cut interest rates by 25bps for the second consecutive month. Investors expect that further rate cuts may continue for some time. Policymakers at the Swiss central bank still disagree with the Fed's decision not to cut rates and are similarly hesitant about additional rate cuts by the ECB. Additionally, political risks in France are prompting investors to sell risky assets to increase safety.

Techical analysis data (5H)

Resistance: 0.9007, 0.9014, 0.9025

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.8978 - 0.8989 but cannot break the support at 0.8989, you may set a TP at approximately 0.9014 and SL at around 0.8971 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.9007 - 0.9014, you may set a TP at approximately 0.9025 and SL at around 0.8978 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.9007 - 0.9014 but cannot break the resistance at 0.9007, you may set a TP at approximately 0.8978 and SL at around 0.9025 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.8978 - 0.8989, you may set a TP at approximately 0.8971 and SL at around 0.9014 or according to your acceptable risk.

Pivot point June 28, 2024 08:25 PM. GMT+7