Swiss franc jumps as inflation beat piles the pressure on the SNB


Dread from it. Run from it. It arrives all the same. That seems to be the story with inflation across the globe and it’s finally hitting the shores in Switzerland here.

SNB chief Thomas Jordan last month warned that the central bank is watching inflation closely and that they “stand ready to act if inflation solidified”. Whether or not today’s consumer inflation reading is significant in that regard will depend on their response but it is without a doubt a step towards that direction at least.

The SNB and BOJ are the two remaining major central banks left behind in the inflation battle. But as price pressures start to mount and become more evident and persistent, they may not be able to stay put for too long.

The market is already starting to sense that and the Swiss franc’s move in reaction to the data is telling.

USD/CHF has fallen quickly from 0.9625 to a low of 0.9575 and is now keeping around 0.9580 levels. A look at the daily chart:

USDCHF D1 02-06

Sellers are still holding their ground after the run since mid-May, keeping below the 50.0 Fib retracement level at 0.9630. And if the SNB starts to signal any potential shift in policy narrative, expect there to be major gains to be had for the swissie. It may not come today or tomorrow but with every  inflation  data point moving higher, it is like a ticking time bomb.