While the first rate cut in March came as a real surprise, last week's decision only served to make matters worse. It has to be said that the pressure was beginning to mount on the SNB, which likes to keep a certain control over its currency, despite abandoning the PEG a few years ago... The Swiss franc plays a major role in the global economy, and is often associated with a safe-haven asset: when the going gets tough, buying Swiss francs is like buying gold. And it can't be said that recent news from Europe (and the eurozone in particular) has been very positive. Worse still, it may be even more negative once the results of the French parliamentary elections are known.

For example, the Swiss franc has strengthened considerably since its May lows, to the point where a cut in interest rates should contain its rise.

Elsewhere in the world, the decision by Australian central bank to leave rates unchanged has had no significant impact on the aussie, at least for the time being. Against the dollar, it remains in its narrow consolidation channel between 0.67 and 0.6578. The kiwi isn't doing much better: after hitting intermediate resistance around 0.6200/20, it is consolidating flat with initial support at 0.6100. As for the Japanese yen, it is closing in on its resistance at +/- 160 against the dollar, a level which should ideally trigger some profit-taking.