Forex - USD/CHF rebounds as SNB cuts rates to curb franc gains

Forexpros – The U.S. dollar rebounded from a record low against the Swiss franc on Wednesday, turning sharply higher, after the Swiss National Bank cut its interest rate and said it would take further action if warranted to curb the franc’s steep gains.

USD/CHF pulled back from 0.7606, the pair’s all time low, to hit 0.7766 during early European trade, surging 1.88% over the day.

The pair was likely to find support at 0.7606, the record low and resistance at 0.7952, Monday’s high.

Switzerland’s central bank narrowed its three-month Libor rate to 0.25% from 0.75%, saying the currency was “massively overvalued” adding that it “won't tolerate” a “tightening of monetary conditions” and therefore was taking measures against the franc.

The SNB also said it will “significantly” increase the supply of liquidity to the Swiss franc money market over the coming days to help counter the currency's appreciation.

The bank said the action came about after economic outlook “deteriorated substantially” following the franc’s surge to a record against the euro and the dollar.

The Swissie also weakened against the euro, with EUR/CHF jumping 2.22% to hit 1.1063.

Later in the day, payroll processing firm ADP was publish a report on U.S. non-farm payrolls, while the U.S. Institute of Supply Management was to publish data on service sector growth.