Forex News

Nomura analysts note that the Swiss National Bank (SNB) kept its policy rate at 0.00% and strengthened its guidance on FX intervention as the Swiss Franc (CHF) has appreciated. Very low Swiss inflation and a stronger CHF are seen prompting FX purchases in Q1. Nomura expects the policy rate to stay at 0.00% and sees no further rate cuts.

SNB holds rates and eyes FX action

"The Swiss National Bank (SNB) left its policy rate at 0.00% at its March meeting, as we and consensus expected. More significantly, it changed its guidance on FX intervention since the last policy meeting to say that “given the conflict in the Middle East, the SNB's willingness to intervene in the foreign exchange market has increased. The SNB thereby counters a rapid and excessive appreciation of the Swiss franc, which would jeopardise price stability in Switzerland”."

"Inflation in Switzerland is very low (0.1% y-o-y in February), in part due to foreign goods and services deflation, which has persisted for over two years as a result of a strengthening CHF. According to the SNB’s analysis, CHF has risen by 2.5% on a trade-weighted basis since mid-December. We believe that this strengthening is likely to cause the SNB to intervene with FX purchases in Q1 to limit appreciation pressures and their impact on inflation."

"Indeed, Chairman Schlegel confirmed at the press conference that Switzerland’s accord with the US means that the SNB can intervene in FX markets, and that the SNB’s intention would not be to gain an unfair advantage (source: Bloomberg). Data on SNB FX interventions in Q1 will not be available until the end of June, however."

"We believe the SNB will leave its policy rate unchanged at 0.00% for the foreseeable future. We forecast inflation to accelerate in the months ahead, supporting the view that another rate cut will not be necessary."

"Chairman Schlegel reiterated at the press conference that the bar for introducing negative interest rates remains elevated (source: Bloomberg). Indeed, with inflation likely to rise this year as a result of the global energy price shock (although we note Swiss consumers are more insulated from a rise in energy prices than their European neighbours) the need for a negative policy rate appears somewhat reduced, though declining imported product prices remain an inflation concern."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Deutsche Bank’s Sanjay Raja notes the Bank of England (BoE) kept Bank Rate unchanged but clearly signalled a stronger focus on inflation risks. The Monetary Policy Committee (MPC) dropped its easing bias and stressed readiness to act if inflation expectations rise. Raja notes that persistent conflict in Iran and elevated energy prices could force rate hikes, making previous expectations for rate cuts unlikely in coming quarters.

BoE holds but signals hawkish readiness

"The message from the BoE today was clear: the MPC will act to guard against rising inflation expectations should it lead to more persistent price pressures. While there was no change in Bank Rate, the committee was unified in its decision to ‘wait-and-see’ how the Iran conflict evolved before rushing into any rate moves."

"What’s the key line to take away today? ‘All members stood ready to act as necessary to ensure that CPI inflation remained on track to meet the 2% target in the medium term.’ The MPC refrained from maintaining an easing bias today."

"Should energy prices stick at current levels, the MPC could be forced into pushing rates higher to curb inflation (which Bank staff now see tracking between 3-3.5% over the coming quarters). "

"Should we now be talking about rate hikes? The probability of hikes will have risen meaningfully following today's decision with all members noting that they will know more by the April decision."

"In some way, this is the new and important benchmark. If we get no clarity or resolution on the war, we will likely see a pivot in policy. Put simply, rate hikes are now a real risk for the economy."

"There is now a lot of pressure for fiscal policy to respond to guard against rate hikes. Chancellor Reeves' timeline to respond has been shortened. And the prospect of rate cuts now seems like a distant memory – at least for the coming quarters.”

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Initial Jobless Claims in the US fell by 8,000 in the week ending March 14.
• The US Dollar Index holds steady near 100.00 in the American session.

There were 205K Initial Jobless Claims in the week ending March 14, a decrease of 8K from the previous week's unrevised level, the US Department of Labor (DOL) reported on Thursday. This reading came in better than the market expectation of 215K.

In this period, the 4-week moving average declined by 750 to 210,750.

"The advance number for seasonally adjusted insured unemployment during the week ending March 7 was 1,857,000, an increase of 10,000 from the previous week's revised level," the DOL noted in its press release.

Market reaction

The US Dollar Index stays in the lower half of its tight daily range after this data and was last seen losing 0.15% at 100.08.

ING’s Senior Economist Min Joo Kang notes that the Bank of Japan kept its policy rate at 0.75% and maintained a broadly unchanged economic outlook, while acknowledging higher uncertainty. Governor Ueda avoided giving timing signals on the next move, and ING still expects a rate hike in June. Government verbal intervention is seen helping keep USD/JPY below 160, buying the BoJ more time.

BoJ caution underpins restrained Yen outlook

"The BoJ acknowledged the risks surrounding the Middle East situation, but its outlook on the economy hasn’t differed much from the previous meeting. We think this analysis sets the stage for potential rate hikes in the months ahead."

"As we expected, Governor Kazuo Ueda did not drop any hint on the timing of the next rate hike at the press conference, as the BoJ would like to remain flexible amid the Middle East war. He repeated the directional guidance that if the economy continues to recover and inflation approaches to 2% in line with the BoJ’s projection, then the BoJ will continue to adjust monetary policy accordingly."

"But his remarks throughout the press conference were extremely cautious. He mentioned that the BoJ would make an appropriate policy judgement while examining available data at each meeting, and underlying inflation could move in either direction. He mentioned that a slim majority of board members see more upside risks to inflation, but we don't think this means that the board's stance has shifted toward being more hawkish."

"The government's verbal interventions also appear to be keeping USDJPY below 160 levels for now. This will buy more time for the BoJ to be patient about the next rate hike. It is a close call, but we believe that the BoJ will make its next move in June."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• GBP/USD edges higher amid cautious divergence between central banks.
• The Bank of England keeps its key rate unchanged and surprises with a unanimous vote.
• Geopolitical tensions and rising energy prices complicate the inflation outlook.

GBP/USD trades around 1.3300 on Thursday at the time of writing, up 0.28% on the day, supported by a mildly positive market reaction to the Bank of England (BoE) monetary policy decision.

The Bank of England left its bank rate unchanged at 3.75% at its March meeting, in line with expectations, but the unanimous vote from all nine members of the Monetary Policy Committee (MPC) surprised markets, which had anticipated some support for a rate cut. The decision is seen as slightly hawkish, especially as rate hike expectations for this year have been revised higher following the announcement.

In its statement, the central bank highlights uncertainty linked to the conflict in the Middle East, which is driving energy prices higher and is expected to push inflation up in the coming quarters. Internal projections point to inflation around 3% in the second quarter and up to 3.5% in the third quarter, well above the 2% target. However, the BoE stresses that growth remains weak, with Gross Domestic Product (GDP) estimated between 0.1% and 0.2% in the first quarter, complicating the balance between supporting the economy and fighting inflation.

The overall tone reflects a pause in the easing cycle, with policymakers preferring to assess the scale and duration of the energy shock before adjusting policy. BoE Governor Andrew Bailey signals that the economy still has spare capacity, suggesting that inflationary pressures could be partly contained if demand remains subdued.

At the same time, the Federal Reserve (Fed) is also adopting a wait-and-see stance, as the central bank kept rates in the 3.50%-3.75% range on Wednesday, while signaling that inflation risks persist. Chair Jerome Powell emphasized the need for further progress on inflation before considering any rate cuts, reinforcing a higher-for-longer narrative.

This cautious stance on both sides of the Atlantic limits strong directional moves in GBP/USD. However, the slightly hawkish surprise from the UK, combined with stable but still restrictive expectations in the US, provides modest support to the Pound Sterling (GBP) in the near term, in an environment shaped by geopolitical and energy-related uncertainties.

Gold prices remain under heavy pressure on Thursday, breaking below the key $4,600 mark per troy ounce to hit fresh multi-week lows, down for the seventh consecutive day. The steep pullback in the precious metals comes amid marginal gains in the US Dollar and a sharp bounce in US Treasury yields, particularly in the short end of the curve. Meanwhile, unabated geopolitical tensions fail to sustain the metal's strong retracement so far.

(This story was corrected on March 19 at 13:33 to say that Gold fell to multi-week lows instead of multi-month lows.)

In an interview with Fox Business Network on Thursday, United States (US) Treasury Secretary Scott Bessent said that the US is not attacking Iran's energy infrastructure and added that they have allowed Iranian oil to continue out of the Gulf, per Reuters.

Key takeaways

"The US may unsanction Iranian oil on water in coming days."

"There is plenty more the US can do on oil supply."

"The US could do another SPR release to keep price down."

"US Treasury is not intervening in futures markets."

"Treasury is intervening in markets by creating excess supply with oil that is on the water."

"We are not going to do a financial market intervention."

"I would expect Japan would be interested in securing oil supplies from Gulf."

US President Trump has excellent relationship with Japanese leader."

"I think Japan is going to supply the market with oil reserves."

"I believe US growth can be above 3% for 2026."

"We will get results of tariff investigations in July."

"Expectation is tariff regime would be under new authority and unchanged."

Market reaction

Crude oil prices edged slightly lower with the immediate reaction to these comments. At the time of press, the barrel of West Texas Intermediate (WTI) was last seen trading near $95.80, losing about 3.2% on the day.