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SNB's Zurbruegg says they are a true believer in flexible exchange rates
Swiss National Bank board member Zurbruegg speaking in Russia 30 June
Flexible like a 30% appreciation in a session after you remove a cap? Constant intervention ? Yep all very fiexible, for the SNB at least.
Excuse while I fall about laughing.
Can knock that idea on the head then.
source
June 2016 Swiss unemployment rate 3.3% vs 3.5% exp SA
June 2016 Swiss unemployment rate 8 July 2016
Nothing to get the swissy moving.
SNB says ready to adapt in post-Brexit market: newspaper
The Swiss National Bank must be ready to react flexibly to any short term threats or opportunities arising from Brexit, SNB Chairman Thomas Jordan said in a newspaper interview published on Sunday.
"The question for Switzerland is to know how best to adapt. Right now it is still a bit premature to talk of risks or opportunities," Jordan told the newspaper Le Matin Dimanche.
"It's a complicated problem. In the short term, Switzerland must react with flexibility to changes that affect the financial markets and the global economy. In the long term, it must preserve its commercial relations with the European Union, its main partner, but also with the United Kingdom."
Retaining market access to both was fundamental, he said.
The SNB has intervened to weaken the franc after Britain voted on June 23 to leave the EU, as investors fleeing the plunging pound sought refuge in the franc.
Analysts expect the SNB to continue to be active in the markets to stop the franc strengthening above 1.08 against the euro EURCHF= but Jordan said the SNB was not targeting any particular euro/franc exchange rate.
"Our goal is to reduce pressure on the franc, which remains significantly overvalued," he said.
The SNB capped the value of the franc at 1.20 to the euro for over three years, but abruptly dropped that policy in January 2015 in the face of mounting market pressure, causing an immediate spike in the franc's value.
Since then, the franc has weakened somewhat and traded in a range of 1.02-1.12 to the euro, with the SNB relying on negative interest rates and intervention to restrain investors who see it as a shelter from risk.
Uncertainty over Brexit would continue until Britain clarified its economic policy, Jordan said.
While Britain needed to define its future relationship with the EU, the EU should also think about making changes to improve the way it works and deal with the discontent in some member states, Jordan said.
Some countries needed to remove barriers to economic recovery, he said, enabling more labor flexibility and investment in training.
"It's important that the big countries become engines of growth once again, instead of being brakes."
Central banks globally had used all the available instruments to fuel economic recovery since the global financial crisis, but monetary policies required the support of structural policies.
"In principle, you can always take monetary policy further. Lower rates even more or increase money supply. This goes for the SNB too, which is focusing in particular on countering the pressure on the franc," Jordan said.
source
Futures market points to further SNB rate cut by September
Market pricing in a further rate cut 11 July 2016
The likelihood of the Swiss National Bank cutting its deposit rate has almost doubled following Brexit.
Three-month Swiss Libor futures for September imply an 80% chance of a 25 bp cut by that time compared to 44% on June 23, the day of Britain's referendum vote on EU membership. The SNB have repeatedly said that rates could ease further, albeit with limits, in addition to intervention something which Thomas Jordan noted again at the weekend.
"In principle, you can always take monetary policy further. Lower rates even more or increase money supply. This goes for the SNB too, which is focusing in particular on countering the pressure on the franc,"
Relative EUR stability though has helped ease a few post-Brexit fears so far and USD demand, along, with more than a little help from themselves of course, has kept the franc from appreciating too far so in my view as rate cut is not a certainty until those two areas of current focus change.
source
Switzerland trade balance June CHF +3.55bln vs +3.78bln prev
Switzerland June trade balance report 21 July 2016
SNB can cut interest rates lower says Jordan
SNB chairman repeating previous rhetoric 25 July 2016
Speaking in China Jordan has said:
"The low level of interest rates is of course not ideal for foreign-currency reserve management, but monetary policy is expansionary everywhere.That's an environment we can't change and we have to adjust our investment policy accordingly."
"There clearly are risks but whether they materialize or not is not in the hand of Switzerland.It depends on the decisions Europe will take and how strongly they will affect the global economy and financial markets and we hope, of course, that sensible decisions will be taken."
Markets suitably unimpressed by the repetition but we know the SNB will continue to be ever present and keep smoothing as they deem necessary.
SNB announce H1 2016 profits of CHF 21.3bln
Swiss National Bank deliver their H1 2016 results 29 July 2016
SNB's Jordan Says CHF Overvalued, More Room For Intervention
The Swiss National Bank has more room for intervening in the foreign exchange markets to weaken the Swiss Franc, which remains overvalued against the euro, SNB Chairman Thomas Jordan said Monday.
Speaking at a central bankers' conference in Bali, Indonesia, Jordan said the Swiss central bank policymakers are convinced that given the difficult situation with an overvalued Swiss franc, a negative output gap, and negative inflation, the current approach is the right one.
Following the "Brexit" vote, the Swiss currency attracted lot of investor interest as it is considered a safe-haven amid turbulent markets. The SNB intervened in the forex markets to weaken the Swiss franc that logged its biggest gain since January 2015, when the its 1.20 peg against the euro was scrapped.
source
Switzerland SECO consumer confidence July -15 vs -16 exp
Switzerland SECO July consumer confidence report 4 August 2016
- -15 prev
The State Secretariat for Economic Affairs (SECO) Consumer Climate Index measures the level of consumer confidence in economic activity. On the index, a level above zero indicates optimism; below indicates pessimism.USD/CHF Weekly Outlook August 15-19
USD/CHF turned lower in the past week, following strong gains in the first week of August, the pair erased losses on the back of the better than expected NFP print, and has erased nearly 50% of the gains from the prior recovery.
The pair topped out on Tuesday, and began to decline in the North American session. A recovery attempt was made after making a bottom on Thursday, but Friday’s retail sales release served to send the pair to new lows for the week. US retail sales missed expectations of 0.4% and were reported unchanged for the month. The initial reaction saw the pair move lower 56 points, where a reversal took the pair back to test the 76.4% Fibonacci level measured from pre-release highs.
In the new week, the pair stands to face volatility by a set of data releases from the United States. Monthly CPI data is scheduled for release on Tuesday, the figure is expected to come in unchanged, with a rise of 0.2% in the prior reading. Inflation data carries additional sensitivity to the US dollar, as the component is instrumental in the Fed’s decision on the path of normalization. The Fed will release minutes from their latest meeting on Wednesday. Any forward guidance regarding rate hikes can be bullish for the US Dollar, the minutes should include further information on the economy following Brexit, and should acknowledge stronger labor markets.
Positioning in the Swiss Franc is relatively neutral. The COT report indicates a net long position of $14mn among non-commercials in the week to August 9, while in the prior week a $222mn net short was reported.
From a technical perspective, the prior two candles seen on a daily chart of USD/CHF has set a neutral tone following the decline in the first half of the week. On a 4-hour chart, the pair has posted a bullish engulfing candle following the decline led by US retail sales, suggesting a potential recovery is in place. Near-term resistance is seen at 0.9764 and references highs ahead of the retail sales data. Resistance for the week is seen at 0.9786, the level has been influential on several occasions on the daily chart, acting as support in December, and resistance in March and April. Support in the pair is seen at 0.9705, the level references the daily close following the UK vote and served to provide support in early July.
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