The Swiss franc fell against the dollar and euro on Wednesday after comments from the Swiss National Bank indicating it would keep rates on hold. The dollar and the euro were also supported by fading expectations of rate cuts in the Eurozone and America as a result of rising concerns about inflation.
The franc was 0.29 percent weaker versus the dollar compared to the New York close at 1.1545 francs per dollar, as talk that the Federal Reserve might not cut rates as expected due to inflation worries boosted the dollar.
The franc was also trading lower versus the euro at 1.6615 francs per euro compared to the New York close, with growing concerns about inflation also supporting the euro. "In the Eurozone, there is an increased fear of inflation as a result of the data coming out of Germany this morning. This means that any expectations that the ECB will cut rates will have vanished now," said bank Clariden Leu's Sandro Baechli.
"The franc is likely to be volatile because there is not much trade at the moment," said Baechli. On Tuesday, the SNB gave a strong signal that Swiss interest rates were likely to remain on hold. SNB board member Thomas Jordan said the inflation outlook for Switzerland had shown that interest rates were appropriate and should keep inflation under control in the medium term.
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