2017.12.1405:37:00UTC+00Franc Falls After SNB Maintains Rate; Cautions Again Over Currency Rise

The Swiss franc dropped against its major counterparts in the early European session on Thursday, after the Swiss National Bank maintained its expansionary monetary policy stance and cautioned again over the domestic currency's rise, although its overvaluation has continued to decrease against the euro and the US dollar.

The interest rate on sight deposits at the SNB was retained at -0.75 percent and the target range for the three-month Libor was kept unchanged between -1.25 percent and -0.25 percent, the bank said in a statement.

The depreciation of the Swiss franc reflects the fact that safe havens are currently less sought after.

However, according to SNB, this development is still fragile. Therefore, despite the easing of the situation, the bank said the negative interest rate and the willingness to intervene in the forex market as necessary remain essential.

European shares fell, led by a weakness in banks and investors await the European Central Bank's policy decision later in the day for more clues about policy outlook. Investors digested the Fed's statement that kept unchanged its outlook for three additional rate increases next year.

The currency rose against its major rivals in the Asian session, with the exception of the pound.

The franc pared gains to 114.25 against the yen, from a high of 114.47 hit at 8:00 pm ET. At Wednesday's close, the pair was valued at 114.19. The franc is seen finding support around the 113.00 area.

Data from the Ministry of Economy, Trade and Industry showed that Japan's industrial production rebounded as initially estimated in October.

Industrial production rose a seasonally adjusted 0.5 percent month-over-month in October, reversing a 1.0 percent decline in September. That was in line with the flash data published on November 29.

The franc lost 0.3 percent to a 3-day low of 1.3263 against the pound from yesterday's closing value of 1.3221. Further downtrend may take the franc to a support around the 1.34 mark.

Having advanced to a 9-day high of 0.9840 against the greenback at 11:15 pm ET, the franc reversed direction and fell to 0.9866. The greenback-franc pair finished Wednesday's trading at 0.9854. On the downside, 0.995 is possibly seen as the next support for the franc.

Resuming its previous session's fall, the franc hit a 2-day low of 1.1677 against the euro. This marks a 0.3 percent fall from a high of 1.1642 hit at 1:45 am ET. The pair closed Wednesday's trading at 1.1653. The franc is poised to challenge support around the 1.18 area.

Looking ahead, the Bank of England publishes the decision of monetary policy committee and the minutes of the meeting at 7:00 am ET. The bank is widely forecast to hold the bank rate at 0.50 percent and the asset purchase programme at GBP 435 billion.

At 7:45 am ET, the European Central Bank announces its rate decision. The main refi rate is expected to be retained at a record low zero percent and the deposit rate at -0.40 percent.

In the New York session, Canada new housing price index for October, U.S. weekly jobless claims for the week ended December 9, business inventories for October, retail sales and import and export prices for November are slated for release.