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Swiss Franc Weakens After SNB Reaffirms Pledge On Forex Intervention

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The Swiss franc declined against its key counterparts in the European session on Thursday, after the Swiss National Bank left the policy rate unchanged and reiterated that it is prepared to intervene in currency markets to stem the sharp rise of the safe-haven currency.

The SNB retained the policy rate and interest on sight deposits at the SNB at -0.75 percent, as widely expected.

As the Swiss franc is still highly valued, the SNB said it is willing to intervene more strongly in the foreign exchange market, while taking the overall exchange rate situation into consideration.

The central bank observed that the outlook to inflation is subject to unusually high uncertainty.

Consumer prices are forecast to fall 0.6 percent this year, the bank said.

The economy experienced a sharp recession due to the coronavirus pandemic. GDP is set to shrink by around 5 percent this year.

The currency was higher against its major counterparts in the Asian session as growing coronavirus cases escalated concerns about the global economic recovery.

The Swiss franc fell 0.5 percent to a 3-day low of 113.81 against the yen, after rising to a 2-day high of 114.38 at 8:15 pm ET. The pair was valued at 114.01 at Wednesday's close. Immediate support for the franc is possibly seen around the 112.5 level.

The Swiss currency touched its lowest level since July 24, at 0.9257 against the dollar. This was down by 0.2 percent from Wednesday's closing quote of 0.9238. Further decline in the franc may challenge support around the 0.94 area.

The franc was 0.3 percent lower at a 3-day low of 1.0789 against the euro, after having risen to 1.0755 at 8:15 pm ET. The pair had finished Wednesday's deals at 1.0770. Extension of the franc's downtrend may take it to a support around the 1.10 region.

Survey data from Ifo Institute showed that German business confidence improved further in September.

The business confidence index rose to 93.4 in September from 92.5 in August. However, the reading was slightly below economists' forecast of 93.8.

The franc lost 0.6 percent to a 3-day low of 1.1800 versus the pound, down from a high of 1.1724 it logged at 2:15 am ET. The GBP/CHF pair was quoted at 1.1753 when it ended deals on Wednesday. The franc is seen locating support around the 1.19 mark.

In today's events, U.S. weekly jobless claims for the week ended September 19 and new home sales for August will be featured in the New York session.

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