Franc Trades Higher After SNB Keeps Expansionary Monetary Policy Unchanged

The Swiss franc traded higher against its most major counterparts in early European deals on Thursday, after the Swiss National Bank maintained its expansionary monetary policy and said it will remain active in the foreign exchange market as necessary.

The SNB left its interest on sight deposits unchanged at -0.75 percent and the target range for the three-month Libor between -1.25 percent and -0.25 percent.

The decision was in line with economists' expectations.

Despite a modest depreciation since the September policy session, the Swiss franc is "still highly valued, and the situation on the foreign exchange market continues to be fragile," the bank said in a statement.

Citing the drop in oil prices and moderate growth prospects, the SNB trimmed its inflation forecast for next year to 0.5 percent from 0.8 percent. The outlook for 2020 was lowered to 1.2 percent from 1 percent. The bank retained its projection for this year at 0.9 percent.

The franc showed mixed trading against its major rivals in the Asian session. While it held steady against the pound and the euro, it rose against the yen. Against the greenback, it trended lower.

The franc remained higher at a 2-day high of 114.42 against the yen, compared to 114.01 hit late New York Wednesday. On the upside, 116.00 is likely seen as the next resistance for the franc.

The franc that closed Wednesday's trading at 0.9934 against the euro rose to 0.9915 against the U.S. currency. The franc is poised to challenge resistance around the 0.98 area.

Reversing from an early low of 0.9942 against the greenback, the franc rose to 0.9915. If the franc rises further, 0.98 is possibly seen as its next resistance level.

On the flip side, the franc declined to a 3-day low of 1.2585 against the pound, after rising to 1.2529 at 5:30 pm ET. The franc is seen finding support around the 1.27 area.

Looking ahead, at 7:45 am ET, the European Central Bank announces its decision on interest rate. Economists expect to keep the main refi rate at a record low of zero percent and the deposit rate at -0.40 percent.

In the New York session, Canada house price index for October, U.S. export and import prices for November and weekly jobless claims for the week ended December 8 are scheduled for release.

The U.S. monthly budget statement for November is scheduled for release at 2:00 pm ET.

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