Swiss franc news - page 12
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Swiss tourism sector lobbying for a new CHF cap at 1.1500 vs EUR
Bloomberg with the story quoting from an article in today's Schweiz am Sonntag
The president of Grisons mountain railways, Sylvia Schmid, said:
"We've grown convinced that there needs to be a cap of 1.15 francs per euro"
Not a major lobby given that tourism contributes less than 3% to Swiss GDP but the idea may catch on
The article also reports comments from a banking executive saying the industry is worried that the SNB will further lower depo rate from -0.75% currently, which could mean the charge gets passed to savers
The article also cites an unidentified former SNB governing board member as saying he's afraid that president Jordan could be pushed out of office
EURCHF Friday saw some SNB more intervention to weaken the franc ahead of the ECB meeting next Thursday suggesting they fear/know some bearish euro measures coming. USDCHF and EURCHF were pushed through 1.0320 and 1.0925 in a rush.
Last week I reported comments from Jordan saying that negative interest rates "have proved very useful" and stating that the SNB balance sheet shows they have been active in the market
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Switzerland KOF leading indicator Oct 97.9 vs 100.2 exp Data out a few moments ago
Weaker headline negated by stronger revision
Switzerland retail sales yy real -0.8% vs -0.2% prev Latest reading and it's not so hot Another disappointing piece of data following on the from unexpected drop in GDP released earlier
USDCHF 1.0275 EURCHF 1.0877 both off their lows as buyers line up to buy the dips. SNB won't be far away either
USDCHF playing follow the EURUSD
EURCHF higher but confined
The USDCHF is paying follow the EURUSD today. The EURUSD has soared, the USDCHF has plummeted. Caught in that crossfire, is the EURCHF which is higher on the day (nothing is going to beat the EUR today), but is is not making any new highs. In other words, the USDCHF seems to be attached.
Looking at the USDCHF 4-hour chart, the pair has moved below the 200 bar MA on the 4-hour chart at the 1.1004 level the 38.2% of the trend move higher from the October 15 low comes in at 1.00017 level. The swing low from Nov 12 comes in at 0.9987 - the price is now below that level too. The pair is looking weak (to say the least). If the buyers are to take more control a move back above the 1.10000 level will be step 1. Until then the bears remain in control.
On the downside, for this pair the next key target is at the 0.9901 level. This is the 50% of the move up from October 15 low.
Switzerland CPI Nov mm -0.1% vs 0.0% exp Latest Swiss inflation data out a few moments ago
Softer data will be a concern to the SNB
USDCHF little changed though at 0.9977 just off session highs with EURCHF still underpinned at 1.0845
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Preview: What can we expect from the SNB today?
It's the Swiss National Bank's turn to take centre stage at 08.30 GMT
There was plenty of hype/conjecture prior to the ECB meeting that the SNB was anticipating something quite dramatic
Certainly they were active in the market in the build-up driving both USDCHF and EURCHF higher and have been very vocal about intervening to prevent further CHF weakening
Today it's possible they could cut interest rates as Credit Suisse suggest in their forecast that Eamonn posted up here . The other previews in that post are also worth a read if you haven't already done so
Recent economic data has not been good with CPI coming in below expectations as did Q3 GDP with retail sales also disappointing. So on that basis a cut in interest rates may help but I'm not convinced it would do that much
The euro demand post-ECB has also alleviated the need for immediate action and with EURCHF comfortable above 1.0800 the heat is off for the moment
However, Tuesday's SNB/Govt joint statement on debt reduction highlighted their desire for low/negative rates to remain in place
Said treasury spokesman Philipp Rohr:
"We will continue to follow the strategy of trying to lock in low interest rates for as long as possible.
The negative interest rates, for many people, are almost like an insurance premium that they pay for certainty that they've put their money in a safe place"
So my best guess, and that's all it can be after all, is that they will leave rates on hold while stating that further cuts can not be ruled out and repeat strong rhetoric about preventing CHF appreciation. We know that central banks can surprise so we must remain cautious and trade the fact not pre-empt.
If no rate cut then we should see immediate knee-jerk lower in swiss franc pairs on a relief-rally for CHF but I don't see a big move as the shadow of SNB intervention will not be far away
Currently 0.9842 and 1.0823 both near session lows
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Switzerland has discovered the unintended consequences of negative interest rates Negative interest rates – called “punishment interest” in Germany – have morphed from sheer impossibility to solid reality in Europe. Having seen how they work, the Bank of Canada has invoked them now, and Fed Chair Janet Yellen, has put them “on the table” before a House of Representatives committee.
In Europe, after they became established as the latest method of flogging savers until their mood improves, all kinds of absurdities saw the light of the day. For example, bailed-out national governments can now fund their deficits at negative rates, extracting money from their bondholders, rather than paying them. Perhaps the coolest notion was that banks would be “paying your mortgage.”
That may have been an illusion – at least in Switzerland, where the Swiss National Bank slashed its benchmark rate on “sight deposits” to negative 0.75% on January 15, the day of the epic “Frankenschock.” That day, the SNB abandoned its cap on the franc, which within the blink of an eye, soared nearly 40% against the euro and the dollar, wiping out currency speculators in the process and shaking up global currency markets.
The negative benchmark rate had the effect that by now, 70% of franc-denominated corporate bonds trade with negative yields, according to Credit Suisse. And the theory was that mortgages would certainly head that way.
Initially, interest rates on 10-year fixed-rate mortgages plunged to about 1%, with some quoted below 1%, and folks were already speculating about 0% mortgages or negative-rate mortgages. But then something funny happened on the way to the bank: unintended consequences kicked in.
Swiss banks somehow decided, for whatever inexplicable reason, to make a living. That’s hard to do for banks when they lend out money in a negative interest-rate environment. So the biggest Swiss banks accomplished a unique feat: they’ve jacked up mortgage rates since then, with the 10-year fixed-rate now at about 2% and the 15-year fixed-rate at about 2.5%.
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Barclays Trades Of The Week: Sell EUR/USD & Buy USD/CHF The highly anticipated meeting of the ECB means a lot for the euro, but also for the Swiss franc.
Here are Barclays’ traders of the week, with clear directions:
Here is their view, courtesy of eFXnews:
Currency investors should consider selling EUR/USD and buying USD/CHF this week, advises Barclays Capital in its weekly FX pick to clients. The trades are macro-technical driven and are in line with Barclays’ positions in its strategic portfolio.
Increase in sight deposits points toward SNB intervention Latest data released earlier suggests the SNB have been in to weaken the swiss franc
Domestic sight deposits rose to CHF 406.14bln in w-e 18 Dec vs CHF 401.4bln prev, indicating that banks are preferring to find a safe haven for their funds
A rise in sight deposits can point the finger also at SNB intervention, (although year-end cash flows may be playing it part) and this morning's price action of EURCHF heading higher despite euro weakness elsewhere puts the central bank in the frame as I highlighted in my order board post earlier
Last week EURCHF fell to 1.0756, its lowest level since 6 Nov, but has been well supported since and again from 1.0780 this morning
USDCHF has also seen a solid rally so far as part of the "smoothing"
SNB recently left interest rates on hold but threatened more intervention
Currently 0.9955 and 1.0809 both near session highs
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USD/CHF: Dollar Seen Broadly Lower, Drags Pair Down The pair was driven lower by the rising EUR/USD pair, which managed to breach the $1.09 mark. The USD/CHF pair therefore declined on Tuesday and was trading somewhat lower around ₣0.9915.
Today's US data will bring the third estimate of the US GDP for the third quarter. The economic output should decline from 2.1% to 1.9%, while the GDP price index is projected to remain at 1.3% and the PCE index will most likely decrease to 2.9% from 3.0% previously. The data will be followed by existing home sales.
From the franc point of view, the Alpine economy's trade surplus shrank in the eleventh month of the year, according to the latest report from the nation's Federal Statistical Office (FSO) released on Tuesday.
The trade balance for November deteriorated from ₣4.09 billion to ₣3.14 billion, with exports plunging from 5.4% to -2.1% and imports slowing notably from 3.5% to 0.2%.
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