Swiss Franc mixed after Easter break

The Swiss Franc weakened in its most heavily traded pairs during March after the Swiss National Bank (SNB) took the unexpected step of cutting interest rates from 1.75% to 1.50% at its last policy meeting. This makes it the first major central bank to begin cutting interest rates. Lower interest rates are generally negative for a currency as they reduce capital inflows. 

The SNB’s move came on the back of Swiss data showing a faster-than-anticipated slowdown in both inflation and economic growth during the last quarter of 2023 and beginning of 2024. 

The continued mixed economic data – with Retail Sales in February falling compared to both the previous month and year, and Manufacturing PMI still below 50 and therefore in contraction – suggests there is unlikely to be a change in the thrust of the SNB’s policy towards favoring lower interest rates. 

This should keep the pressure up on the Franc, especially against USD, given lower bets that the Federal Reserve (Fed) will cut interest rates early given continued robust economic data