"If the SNB were to tighten monetary policy reflecting better growth, it would have immediate negative domestic effects"
- Christian Lips, an economist at NordLB
It seems that fundamental data from the Alpine country is having a little impact on financial markets, as USD/CHF and EUR/CHF were both little changed following the report from the Federal Statistical Office showing inflation was stronger-than-expected in November.
The measure of consumer prices in Switzerland inched higher for the first time in more than two years last month, with CPI rising 0.1% on an annual basis, marking the first gain since September 2011. This is stronger from October's 0.3% drop, and above analysts' expectations for a 0.1% decline. On a monthly basis inflation remained unchanged, compared with estimates for a 0.2% loss.
Also Friday the Swiss National Bank said the amount of foreign currency reserves it held inched 0.2% higher last month, hitting 435.663 billion francs, compared with 434.724 billion a month earlier. The figure was practically unchanged, as the Swiss Franc held steady versus the greenback and the single currency over the corresponding period. Since the introduction of the cap in September 2011 the SNB has amassed record reserves through market interventions; however, as the situation in Europe stabilized, the demand for the Franc weakened, decreasing pressure on the central bank. Moreover, with rising inflation there is a possibility Thomas Jordan will soon announce the date on when the cap will be removed.
© Dukascopy Bank SA