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Swiss Franc Spikes Higher As SNB Holds Policy Rate Steady

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The Swiss franc drifted higher against its major trading partners in the European session on Thursday, after the Swiss National Bank maintained its negative interest rates and expressed willingness to intervene in the forex market to stabilize price developments and support economic activity.

The SNB retained its policy rate and interest on sight deposits at the SNB at -0.75 percent. The decision came in line with expectations.

The bank cautioned that the franc remains highly valued, and the situation on the foreign exchange market is still fragile.

Negative interest as well as the willingness to intervene counteract the attractiveness of Swiss franc investments, easing the upward pressure on the currency.

In a separate report, the State Secretariat for Economic Affairs raised its projection for the country's economic growth for this year.

The SECO lifted its growth forecast for 2019 to 0.9 percent from 0.8 percent, while the outlook for 2020 was retained at 1.7 percent.

The currency performed in a mixed manner against its key counterparts in the Asian session. While it fell against the pound and the euro, it was steady against the greenback. Versus the yen, it rose.

The franc was up by 0.3 percent at more than a 5-month high of 110.73 against the Japanese yen, after having declined to 110.35 at 5:00 pm ET. At yesterday's close, the pair was worth 110.43. Further rise in the franc may see resistance around the 114.00 area.

Data from the Cabinet Office showed that Japan core machine orders fell a seasonally adjusted 6.0 percent on month in October - coming in at 798.8 billion yen.

That missed forecasts for an increase of 0.7 percent following the 2.9 percent decline in September.

The franc appreciated to 0.9810 against the greenback, its biggest since September 5, registering a 0.2 percent gain from a low of 0.9832 seen at 5:00 pm ET. The pair was valued at 0.9829 when it ended deals on Wednesday. Next immediate resistance for the Swiss currency is located around the 0.96 level.

After edging lower to a 3-day low of 1.0948 against the euro at 1:30 am ET, the franc advanced 0.2 percent to 1.0924 following the decision. The pair had ended Wednesday's trading session at 1.0937. The franc may challenge resistance around the 1.07 region, should it rallies further.

The Swiss currency rebounded 0.3 percent to 1.2959 against the pound, from a low of 1.2994 it touched at 9:00 pm ET. The franc was trading at 1.2968 a pound at yesterday's close. Continuation of the franc's uptrend may see it testing resistance around the 1.25 level.

Survey data from the Royal Institution of Chartered Surveyors showed that UK house prices declined at the fastest pace since April as uncertainties from Brexit and general election weighed on the property market.

The house price balance fell to -12 in November from -5 in October.

In today's events, the European Central Bank will announce interest rate decision at 7:45 am ET. The ECB is expected to hold its main refi rate at a record low zero percent and the deposit rate at -0.50 percent.

Canada new housing price index for October, U.S. producer price index for November and weekly jobless claims for the week ended December 7 are due in the New York session.

Bank of Canada Governor Stephen Poloz will give a speech about Canada's economic outlook for 2020 at the Empire Club of Canada in Toronto at 12:30 pm ET.

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