Swiss trade balance not suffice to restrain USD/CHF rallies but SNB lined up for rate cut

Switzerland has posted upbeat trade balance numbers for this month at 4.13B which is a way beyond 3.25B and forecasts at 3.18B.

Swiss National Bank left monetary policy unchanged last meeting, the SNB had left the target range for the three-month Libor unchanged at between -1.25% and - 0.25%. The interest rate on sight deposits with the SNB remains at - 0.75%.

Eleven months ago, the SNB anticipated the launch of the ECB's expanded asset purchase programme by cutting interest rates into negative territory.

In one month's time, on 10 December and only one week after the next ECB meeting of 3 December, money markets expect the SNB to cut interest rates again to -1.00%.

The largest increase in SNB FX reserves in October since July suggests the central bank is anticipating further ECB action and has already stepped up currency intervention to counter EUR/CHF depreciation below 1.0750 but currency support against dollar remained subdued ahead of Fed's season.

It has been a strong uptrend for dollar against Swiss franc for last one month or so.

The pair has been able to bounce above resistance 1.0140 levels but rejected above channel line at 1.0219. Currently, it is trending to clear resistance at 1.0140.