Yesterday's SNB announcement triggered a massive sell-off of the Swiss Franc and boosted the US Dollar's prestige.

The US dollar rallied strongly in yesterday's European and New York session trading following the Swiss interest rate announcement that took the global financial world by storm. Several recent US economic data were also supportive of the greenback. Consequently, the US Dollar Index (DXY) climbed to the 104.20 range in Friday's Asian session (22/March).

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The Swiss National Bank (SNB) unexpectedly cut its interest rate by 25 basis points yesterday. Being the earliest major central bank to cut rates in this cycle, the SNB triggered a massive sell-off in the Swiss Franc. On the other hand, the policy, which was taken three months earlier than market expectations, boosted the USD's prestige against various other currencies.

Karl Schamotta, chief market strategist of Corpay Toronto, told Reuters that the SNB's monetary policy easing suggests inflation has been contained and other central banks will soon ease their policies. This perception is driving dollar strength.

"The U.S. does remain the only game in town in global markets offering higher yields, in nominal and real terms, than any of the other major economic blocks," he said. "The flow of currency into the United States remains essentially unstoppable at this point given the optimism around where the U.S. economy is headed."

Some data released in the New York session showed the US economy remains solid. The number of weekly jobless claims was lower than the consensus estimate while existing home sales posted the fastest increase in a year.

S&P Global also reported a relatively stable Purchasing Managers' Index (PMI) in Uncle Sam's country. The Manufacturing PMI score improved from 52.2 to 52.5, higher than the consensus estimate of 51.8. The Services PMI score weakened from 52.3 to 51.7 but was still considered expansionary.

The greenback was observed to strengthen in all major pairs at the time of writing. AUD/USD and NZD/USD fell by more than 0.5%. EUR/USD fell below the 1.0850s threshold again. USD/JPY edged below the 152.00 threshold but is still at its highest range since November 2023. Meanwhile, USD/CHF is looking to touch the 0.9000 threshold.

GBP/USD has also been depressed at its lowest level since the beginning of this month despite the continued improvement in UK economic data. Markets perceived yesterday's BoE policy announcement as more dovish than expected, sending sterling tumbling.