CHF on the back foot, for the happiness of the SNB

It seems that the downside of the CHF vs USD is going on and on, after 5 consecutive downside sessions, with the USD/CHF that is traded at the moment at 0,9772 (+0,17%).

The recent news about the Swiss economy have shown a better situation against last month, with CPI, GDP and Occupation going up which are indicating a reverting of the bad trend seen from the beginning of 2016. In addition, other indicators as manufacturing PMI and KOF index has been better than expected showing an uptrend and making investors hopeful for the next months.

The SNB remains on hold keeping a wait-and-see strategy, waiting for the ECB and FED moves in order to intervene on the market, so the Franc could leave the “Overvalued” status. The recent ECB move have advantaged the Swiss Franc , simplifying the SNB task and avoiding for the moment other interventions and in addition to that Draghi has dismissed the treat of a weaker EUR. At the moment the SNB preference is to stay on hold and keep unchanged both the Libor target and the deposit rate at -0,75%.


Another fact that could influence che SNB behavior is the UK’s Brexit possibility, which could bring down the EUR/CHF cross, making che Franc appreciating and bring the SNB to a possible move on the markets.

At the moment the EUR/CHF is trading at an almost ideal level for the SNB and for the Swiss economy: export seems to have no problems to sustain this exchange rate and for that reason the SNB is not willing to depreciate the Franc any further.

The market positioning is flat at the moment, and it seems that the pressure on the EUR downside is less than at the beginning of the year.

Ahead of the Brexit referendum, the expectations for the EUR/CHF are seen at the downside, considering the stress that could reach the markets and the expectations for the next 3 months see the  cross gaining the 1,0800 level.

On the longer term, the fundamentals are confirming the EUR/CHF uptrend, with the pair possibly reaching the 1,1200 level during the next 6 months (if the UK will remain EU).



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s