Good News 3

This week, the Swiss National Bank (SNB) is meeting. However, no monetary policy changes are anticipated by the market. For now, the strength of the Swiss franc does not constitute a major economic problem. Thus, it is not necessary to act on rates or increase direct interventions in the foreign exchange market that have been measured in recent months.

The macro point

As expected, the Fed lowered its key interest rate. This was not a surprise. Even though further rate cuts are anticipated (-100 basis points according to the money market by the end of 2026), it is not certain that another cut will occur in October. Everything will depend on the inflation path. Many economists rightly believe that the impact of tariffs will be felt on inflation at the end of Q3 and during Q4. Caution is advised. In economics, tracking the money supply, that is, the liquidity entering the economy, is a fundamental rule. Generally, the greater it is, the more economic activity will be supported. The good news is that it continues to grow globally, having reached $140 trillion last July worldwide (latest available figure). This is obviously enormous. More than 70% of central banks worldwide are cutting rates – notably in emerging countries. This is also unprecedented in an economic expansion phase. There is plenty of money. Although borrowing costs are increasing for developed countries – except for Switzerland, which acts as a safe haven – it remains manageable for businesses. Take L'Oréal, its borrowing rate is now lower than that of France. This is, moreover, an anomaly. Although many countries are nearing the end of their monetary easing cycle – in the eurozone only one more rate cut is possible – global liquidity will continue to rise in the coming months. As anticipated, the US Federal Reserve (Fed) lowered its key interest rate by -25 basis points last week. Further cuts are expected – probably as early as October if inflation remains contained. For now, the money market is aiming for a 3% key interest rate by the end of 2026, which suggests that four further rate cuts of -25 basis points each are possible in the coming months. Clearly, this anticipation is subject to change based on developing conditions. The growth of the money supply should at least prevent a recession, including in the US. However, this does not guarantee that growth will reconnect with its potential. In France, for example, growth this year is expected to be below its estimated potential of 1%. At best, we will reach a 0.5% increase in GDP. The same goes for the United States. Economists estimate that US potential growth is between 2% and 2.5%. Growth is expected to be below that, around 1.7% this year according to Fed forecasts. How can this be explained? Several studies point out that more liquidity is now needed in circulation to reach a given level of growth. It's a sign that the economy is less efficient, less productive, and that there are probably significant pockets of inefficiency. A few years ago, there was talk of zombie companies surviving thanks to access to low-cost credit. They still exist. In a way, we are certainly doomed to low growth levels... If we see the glass as half full, at least we are avoiding recessions with high social costs that we have experienced in the past.

Technical point

On the foreign exchange market, the euro continues to rise against almost all major currencies, except for the Swiss franc. The rise against the dollar should continue. The main resistance is now at 1.20 (the one at 1.1922 can be easily breached). It is likely that this level will be reached in the coming weeks. The consensus expects an EUR/USD pair at 1.30 on average next year. Take it with caution, of course. The euro should also continue its climb against the yen, targeting 175.44 – a five-year high. Against the Swiss franc, the situation is more complicated. The EUR/CHF pair has slightly retreated mainly because the Swiss currency is seen as a safe haven in the context of high public debt in the eurozone. We do not see a rush of investors on the CHF. It remains measured. But it is enough to slightly push down the EUR/CHF. This movement may not be sustainable. We anticipate a return to parity next year. The support and resistance levels displayed below indicate the lows and highs within which the rates should evolve during the week.

	Weekly Supports		Weekly Resistances
	S2	S1	R1	R2
EUR/USD	1.1609	1.1649	1.1922	1.2000
EUR/GBP	0.8534	0.8589	0.8709	0.8723
EUR/CHF	0.9220	0.9250	0.9410	0.9433
EUR/CAD	1.6188	1.6200	1.6434	1.6490
EUR/JPY	169.99	170.90	174.99	175.44

Announcements to follow

Across the Atlantic, caution is advised regarding the first GDP publication for Q2, which could be affected by the surge in gold bar imports (to disproportionate levels) and by stockpiling by U.S. companies just before the introduction of tariffs. In any case, a recession in the U.S. economy is clearly off the table – let's remember that this was one of the fears last summer.

Lastly, as the signals regarding the U.S. labor market are contradictory, attention should be paid to the weekly jobless claims that provide real-time insight into U.S. employment trends. Based on the indicators of recent months, the trend is less favorable. Notably, there is an increase in the unemployment rate among minorities. Nonetheless, there's no need to panic. The U.S. economy remains highly resilient.

Below are the publications and events that are expected to have a significant impact on exchange rates development.

Day	Time	Country	Indicator	Expectations?
25/09/2025	09:30	Switzerland	Central Bank Meeting	No change in monetary policy
25/09/2025	14:30	USA	Quarterly GDP Release	Previous at 3.3% in quarterly data
25/09/2025	14:30	USA	Weekly Unemployment Claims	Important to monitor due to recent signs of labor market fragility

The information presented in this publication is provided for informational purposes only and does not constitute investment advice, a sales offer, or a solicitation to buy, and should not be used as a basis or be considered as an encouragement to engage in any investment.