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16 Jan 2015
SNB to intervene in USD/CHF next? - SocGen
FXStreet (Bali) - According to Societe Generale, after allowing the markets to clear, further intervention by the SNB is likely – but possibly, in USD/CHF rather than EUR/CHF, with added emphasis on the CHF trade weighted index.
Key Quotes
"The SNB clearly does not believe that the upward pressure on the Swiss franc from inflows due to ECB policy, Greek uncertainty, the Ukraine crisis and Russian sanctions, will pass soon. That’s not a great vote of confidence in the prospects for either calmer markets in the months ahead, or for the Euro’s future value."
"So the SNB has decided to jump to ‘Plan B’ rather than persist with the previous one in the (futile?) hope that pressure would ease any time soon. The SNB is not ‘giving up’ but rather, changing tack. After allowing the markets to clear, further intervention is likely – but possibly, in USD/CHF rather than EUR/CHF, with added emphasis on the CHF trade weighted index."
"After all, the marginal buyer of Swiss luxury goods nowadays is more likely to be in Beijing or Shanghai than Frankfurt or Paris. After that, the SNB will see what the effect of the new interest rate stance is, after all, such deeply negative rates will have an impact on the appetite of anyone to keep money on deposit in Swiss francs."
"The SNB must hope that the EUR/CHF, after settling at a much lower level initially, then drifts back upwards towards 1.20. A more realistic hope might be that the USD/CHF rate gets back above parity later this year."
Key Quotes
"The SNB clearly does not believe that the upward pressure on the Swiss franc from inflows due to ECB policy, Greek uncertainty, the Ukraine crisis and Russian sanctions, will pass soon. That’s not a great vote of confidence in the prospects for either calmer markets in the months ahead, or for the Euro’s future value."
"So the SNB has decided to jump to ‘Plan B’ rather than persist with the previous one in the (futile?) hope that pressure would ease any time soon. The SNB is not ‘giving up’ but rather, changing tack. After allowing the markets to clear, further intervention is likely – but possibly, in USD/CHF rather than EUR/CHF, with added emphasis on the CHF trade weighted index."
"After all, the marginal buyer of Swiss luxury goods nowadays is more likely to be in Beijing or Shanghai than Frankfurt or Paris. After that, the SNB will see what the effect of the new interest rate stance is, after all, such deeply negative rates will have an impact on the appetite of anyone to keep money on deposit in Swiss francs."
"The SNB must hope that the EUR/CHF, after settling at a much lower level initially, then drifts back upwards towards 1.20. A more realistic hope might be that the USD/CHF rate gets back above parity later this year."