EUR/CHF scales 32-week peak ahead of ECB policy decision

Key moments

The EUR/CHF currency pair was holding near a fresh 32-week high of 0.9635 on Thursday, as investors braced for the outcome of the ECB’s policy meeting later in the day.

Yesterday the Euro surged more than 1.6% against the Swiss Franc after reports in the media that the parties, which are to form Germany’s next government, have reached an agreement to overhaul the nation’s debt rules. The deal between the CDU-CSU and the Social Democrats is to be put before the Bundestag next week.

The European Central Bank is largely expected to lower its main refinancing operations rate by 25 basis points to 2.65% at its March policy meeting. And, the ECB deposit facility rate is expected to be reduced to 2.50% from 2.75% currently.

The minutes of the ECB’s January meeting showed the Governing Council had agreed monetary policy was still restrictive and it was too early to discuss a potential conclusion of the bank’s easing cycle.

Some ECB policy makers expressed concerns over sticky services inflation and higher energy prices, while others were concerned about sluggish economic growth and the risk overly-restrictive policy might drive the central bank to miss its 2% inflation objective.

Yet, there was a consensus among policy makers that the disinflation process was on track and growth risks were on the downside.

Market players will be closely watching ECB President Christine Lagarde’s press conference for any hints regarding future interest rate trajectory as well as the ECB’s set of macroeconomic projections.

Switzerland unemployment rate drops to 2.9% in February

Meanwhile, the latest data out of Switzerland showed the country’s unemployment rate had dropped to a non-seasonally adjusted 2.9% in February from 3.0% in the prior month. The latter has been the highest unemployment rate since May 2021.

The number of unemployed individuals decreased by 0.3 thousand to 135.4 thousand, the data showed.

Switzerland’s youth unemployment rate, which tracks job-seekers aged between 15 and 24, dropped to 2.7% in February from 2.8% in January.

The EUR/CHF currency pair was last inching up 0.08% to trade at 0.9613. During late Asian session, the minor Forex pair registered an intraday high of 0.9635, or a level not seen since late July 2024.