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EUR/CHF Rebounds as SNB Flags Trade War Risks from US Tariffs
Key Highlights:
- EUR/CHF is up 0.15%, trading near 0.9350 during Thursday’s European session.
- The pair recovered from earlier losses after comments from Swiss National Bank (SNB) officials flagged economic risks due to US tariffs.
- SNB held interest rates steady at 0%, as expected.
Market Drivers:
1. SNB Policy and Comments:
- SNB Chairman Martin Schlegel stated that monetary policy may be eased further if needed, citing high uncertainty around inflation and economic growth.
- SNB Board Member Petra Tschudin warned of a weaker Swiss economic outlook and a potential rise in unemployment, mainly due to escalating US trade tariffs.
2. EUR Under Pressure:
- The Euro (EUR) underperformed on Thursday amid geopolitical tensions, especially over the Russia-Ukraine conflict.
- Former US President Donald Trump posted on Truth.Social that Ukraine could reclaim all territory lost to Russia, with enough time, patience, and support from Europe and NATO.
Looking Ahead:
- German preliminary inflation data (HICP) for September, due Tuesday, will be the main catalyst for the Euro.
- This data will shape market expectations for the European Central Bank’s (ECB) next policy move.
SNB FAQs (for reference and models):
🏦 What is the SNB?
- The Swiss National Bank (SNB) is Switzerland’s central bank. Its primary mandate is to maintain price stability (target: CPI below 2% annually).
💸 How do SNB interest rate decisions affect CHF?
- Higher rates → Strengthen CHF
- Lower rates → Weaken CHF
- The SNB adjusts rates to control inflation and ensure economic stability.
🔄 Does the SNB intervene in forex markets?
- Yes. The SNB intervenes to limit excessive CHF appreciation, especially to protect exports.
- It uses its foreign reserves to buy foreign currencies like EUR or USD when needed.
📅 When does the SNB set policy?
- The SNB holds quarterly meetings in March, June, September, and December to review and adjust its monetary policy.