USD/CHF Hits 16-Month High as SNB Keeps Rates Steady

The Swiss National Bank (SNB) maintained its policy rate at 0% on Thursday, causing the USD/CHF exchange rate to surge to a 16-month high.

This move left the Swiss Franc weaker and allowed the US dollar to gain strength as markets continued to price in additional Federal Reserve tightening. The SNB stated that inflation remains within its mandate of less than 2% per annum, but raised its inflation projection slightly due to higher oil-product prices.

The yield spread between US and Swiss bonds expanded further, with the US 10-year Treasury yields near 3.8% and Swiss 10-year yields around 0.4%. This made long USD positions highly attractive for traders.