Swiss franc soars as SNB beats the ECB to the punch in hiking rates

This is quite the statement being made by the SNB as they surprised markets by trying to get ahead of the curve against inflation by hiking interest rates by 50 bps today. That brings the policy rate to -0.25% from -0.75% expected by markets.

The franc has soared as a result with EUR/CHF falling by 200 pips right away. I would expect the SNB to try and tame the move but it is going to be hard as markets try to pile on the pressure.

It's a funny thing. The SNB decides to outdo the ECB in terms of rate hike timing and size only to see the franc soar higher and then decide to intervene to contain that? It's really a lot of work to do for the central bank considering that it isn't going to achieve much - especially if the actual goal is to rein in inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term pressures.

Another interesting thing to note in the latest statement is that the SNB has dropped the wording that the Swiss franc is "highly valued". It's subtle but I guess it is a little contradictory to include that while tightening policy.

Going back to EUR/CHF, the technicals show that the double-top pattern at 1.0500 is being vindicated now with a drop below the trendline support (white line) below 1.0300. Keep below the support region around 1.0230-50 and sellers will stay in control to keep the downside pressure running.

The franc strength is likely to also be reinforced by the fact that markets will feel a bit jittery as even the most dovish of central banks are moving now. It is something I made mention to back last month here.