Swiss Franc Rises After Hot Swiss CPI Data

(RTTNews) - The Swiss franc strengthened against most major currencies in the European session on Thursday, after Switzerland's consumer price inflation accelerated more-than-expected in August to the highest level in nearly two years.

Data from the Swiss Federal Statistical Office showed that the consumer price index climbed 0.8 percent yearly in August, faster than the 0.4 percent increase in July. The expected inflation rate was 0.5 percent. Moreover, a similar inflation rate was last seen in September 2024.

On a monthly basis, consumer prices rebounded 0.4 percent in August after falling 0.1 percent in July. The renewed monthly rise was driven by higher housing rentals along with increasing costs for petrol, diesel, heating oil, and inpatient hospital services.

Data from the State Secretariat for Economic Affairs, or SECO showed that the Switzerland's economy expanded at the fastest pace in nearly five years in the second quarter. Gross domestic product logged a quarterly growth of 1.5 percent, the fastest since the third quarter of 2021. The rate matched the preliminary estimate released in August and followed a growth of 0.5 percent in the first quarter.

The Swiss National Bank had projected the economy to grow around 1 percent this year and about 1.5 percent next year. At the quarterly meeting in June, the SNB had left its policy rate at zero percent. The next monetary policy announcement is due on September 24.

Markets are now focusing on Friday's US nonfarm payrolls report. After an unexpected drop of 23,000 jobs in July, the economists predict 56,000 additional jobs in August. It is anticipated that the unemployment rate would stay at 4.1%.

In the European trading today, the Swiss franc rose to nearly a 2-week high of 1.0910 against the pound, from an early low of 1.0963. The franc may test resistance around the 1.08 region.

Against the euro and the U.S. dollar, the franc advanced to 2-day highs of 0.9384 and 0.8083 from early lows of 0.9420 and 0.8131, respectively. If the Swiss franc extends its uptrend, it is likely to find resistance around 0.92 against the euro and 0.79 against the greenback.

Meanwhile, the franc rose slightly to 94.50 against the yen and then dropped to 1-month low of 192.99. The franc is likely to find support around the 191.00 region.

Looking ahead, Canada and U.S. trade data for July, U.S. weekly jobless claims data, Canada and U.S. S&P Global PMI reports for August are slated for release in the New York session.