The Swiss National Bank (SNB) reported an annual loss of 3 billion Swiss francs (USD 3.54 billion) in 2023 and said it would not make payments to Switzerland's central or local government or pay dividends to investors.

The loss is believed to have occurred as a result of interest rate hikes aimed at fighting inflation.

Although in Switzerland, perhaps, inflation is at the lowest level: according to yesterday's Core Price Index data, the actual value is = 0.0% (expected = 0.1%, a year ago = -0.2%, the highest actual value in 2023 was = +0.7 %). However, the SNB raised the rate to 1.75% twice in 2023, and this led to it making more payments to deposit account holders.

Note that the loss for 2023 is much less than the record minus 133 billion for 2022. Reuters writes that the losses will not affect the bank's current monetary policy, and interest rates could be cut during 2024.

On November 2, we wrote that the franc could continue to strengthen. Since then, USD/CHF has fallen about 6%, setting its 2023 low on December 28 at 0.83327.

The graph shows that:
→ during 2023, the price moved within the descending channel;
→ at the 2023 low, the price was unable to reach its lower limit — a sign of a lack of selling pressure;
→ the median line of the channel still serves as resistance (as shown by the arrow);
→ level 0.845 changed its role from resistance to support;
→ in the area of the 2023 lows, long lower shadows were formed on the candles (a sign of aggressive demand). At the same time, the RSI indicator showed that the market was strongly oversold.

Taking into account the above arguments, it can be assumed that the USD will be able to strengthen against the franc, stopping the pace of the downward trend in 2023. A bullish breakdown of the median line (or failure of the price to consolidate below the 0.845 level) will provide more arguments in favor of the presence of demand in the market in question.

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