Forex Trading News: Swiss Franc hits new record against US Dollar

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The Swiss Franc was lifted today to a record high after the important KOF economic indicator was released higher than expected at 2.29, versus the forecast 2.20. Prior figure was at 2.24.

Even after Swiss National Bank Chairman Phillip Hildebrand gave his upbeat speech, the Franc started to rise. He mentioned that inflationary risks are beginning to rise due to surging oil prices as well as other commodities. He added that despite the strong Swiss currency, which makes exports expensive, the domestic economy appears to be expanding more than expected.

“The growth of the Swiss economy should proceed dynamically,” the KOF institute said in its statement. Swiss gross domestic product expansion “should remain positive and even exhibit some increasing momentum.”

Many could interpret his speech to read that the SNB may start normalizing monetary policy and even see a rate hike soon.

We could already see that market have begun pricing in a rate hike.

After release of the news, the Swiss Franc gained 7 pips against the greenback. USDCHF dropped from 0.8675 at news time down to 0.8668 in 5 minutes. The pair continued downwards to as low as 0.8643 to hit a record low. The Swissy is supported by a broadly weaker US Dollar which is at a three year low against a basket of currencies, based in the US Fed keeping monetary policy loose.

Meanwhile, EURCHF also dropped since the news, from 1.2897 at news time (0930GMT) down to 1.2859 at time of writing. (1200GMT)