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USD/CHF: the pair continues to rise on 02.03.2016

Despite positive Swiss news, the pair USD/CHF has been rising since mid February. The rise in the pair is supported by the soft monetary policy of Swiss National bank. Currently, interest rate on deposits is negative, at the level of -0.75%.

The Franc is losing its status of a safe-haven currency due to possibility of intervention of SNB of which SNB has never notify in advance and usually does not give any comments after. According to SNB Swiss franc is overvalued, which prevents economic growth in the country and increases inflation. High rate of the national currency causes reduction of exports from the country and decreases a number of tourists to the country.

Economic situation in Switzerland is deteriorating. Index of economic expectations ZEW for February fell to -5.9 against -3.0 in January. This index evaluates business climate, situation in the market and other facts affecting the state of economy in Switzerland.

The rise in the pair USD/CHF was also supported by the expectations on the interest rate increase in the USA, as economic news from this country is all positive.

It became known yesterday that index of purchasing managers in the manufacturing sector of the USA (ISM) rose to 49.5 in February versus 48.2 in January and the forecast of 48.5.

Positive index of business activity in the US manufacturing sector, increasing inflation as well as positive consumer confidence index and GDP for Q4 (1.0% against the forecast of 0.4%) have helped the rise in the USD.

At the same time economic growth in Switzerland is slowing down. AS it became known today, Swiss GDP rose by 0.4% in Q4 against the previous month and by 0.4% against the same period last year. (on annual basis by 0.9% against the rise of 1.9% in 2014).

It is possible that SNB will adopt additional measure to weaken Swiss franc and this fact deters investors from buying Franc. Next meeting of SNB will be held on 17 March.



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