EUR/CHF steady as Swiss inflation slides to 0.0% ahead of SNB meeting

• EUR/CHF holds in a tight range as markets weigh Swiss CPI and Eurozone data.
• Eurozone PMIs strengthen, while Swiss inflation falls to 0.0% YoY.
• Focus shifts to ECB President Christine Lagarde’s speech later today, followed by the Swiss Unemployment Rate and Eurozone Retail Sales on Thursday.

The Euro (EUR) trades flat against the Swiss Franc (CHF) on Wednesday as traders digest a fresh batch of Swiss inflation figures alongside Eurozone Purchasing Managers Index (PMI) surveys and Producer Price Index (PPI) data. At the time of writing, EUR/CHF is trading near 0.9335, hovering within its tight one-week range.

Switzerland’s latest inflation figures underscored a further cooling in price pressure. The Consumer Price Index (CPI) fell 0.2% MoM in November, matching the forecast of -0.2% and easing from the -0.3% decline recorded in October.

On an annual basis, CPI slowed to 0.0% YoY, missing the 0.1% forecast and down from 0.1% previously, effectively pushing Swiss inflation back to the lower bound of the Swiss National Bank's (SNB) 0-2% target range.

The data reinforces the view that Swiss disinflation is deepening, but the SNB is still likely to remain cautious as it heads into its December 11 policy meeting. Despite headline inflation slipping to the bottom of the target band, analysts widely expect the SNB to keep the policy rate unchanged at 0%. Policymakers have signalled that returning to negative interest rates remains a high bar, though they stand ready to cut rates if necessary.

Across the Eurozone, the latest activity and inflation data offered a mildly firmer backdrop for the common currency. The HCOB Composite PMI rose to 52.8 in November, beating expectations of 52.4 and edging higher from 52.4 in October, marking the strongest expansion in two and a half years.

The Services PMI also improved, climbing to 53.6 versus the 53.1 forecast and up from 53.1 previously.

Meanwhile, Producer Price Index (PPI) data pointed to continued disinflation at the industrial level, with PPI rising 0.1% MoM in October, matching expectations after a -0.1% decline the month before. On an annual basis, PPI fell -0.5% YoY, sharper than the -0.4% forecast and easing from -0.2% previously.

Attention now turns to Lagarde’s speech later in the day. On Thursday, Switzerland’s seasonally adjusted Unemployment Rate for November and the Eurozone Retail Sales will be in focus.