Swiss franc news - page 14
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We're not yet at rock bottom on the deposit rate says Jordan More from the SNB head
I think it was two days before they pulled it that he re-affirmed the willingness to keep it in place for as long as necessary, and now he's surprised it lasted that long? It's scary what buttons these central bank clowns have their fingers on
source
February 2016 Swiss ZEW investor sentiment survey -5.9 vs -3.0 prior Latest Swiss ZEW investor sentiment survey for Feb 2016
Things are not that chipper in Switzerland
Switzerland trade balance Jan CHF +3.51bln vs +2.54bln prev
Improved headline and exports welcome aided by weaker franc but contraction still in imports will be a concern.
USDCHF 0.9909 EURCHF 1.1042 still both underpinned
SNB To Be Challenged By The ECB In March: Where To Target EUR/CHF? - Danske SNB to be challenged by the ECB in March − The light December easing package from the ECB implied little pressure on the SNB to act. But EUR/CHF could come under downward pressure if the ECB eases in March. − The market is already pricing an ECB move not too distant from our expectations (= limited downside from EUR leg), but is also projecting lower rates from the SNB (= downside from CHF leg if we are right that this will not materialise).
− We maintain that a first line of defence to guard against CHF appreciation will likely be SNB intervention – and this should be sufficient in our base case.
Next in line will be either an ‘ordinary’ policy-rate cut or the so-called ‘nuclear option’, i.e. imposing negative deposit rates on a larger number of sightdeposit accounts.
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Franc Protects Parity, Disregards SNB's Jordan The Swiss franc managed to defend the parity for the time being, pushing the USD/CHF pair lower from its three-week high at ₣1.0009 seen February 23 as the market sentiment switched to a risk-off mood on Tuesday.
The climate started changing during Asian market hours as highly watched crude oil prices remained significantly volatile and once again turned lower towards $30 per barrel. Therefore, the WTI bears also dragged the energy sector and whole equity indices to negative territory, spurring demand for safety.
As a result, the Japanese yen and the franc benefited, neglecting the words of Swiss National Bank (SNB) Chairman Thomas Jordan who repeated his mantra of the over-valued franc. In addition, Jordan confirmed the SNB's readiness to intervene on forex markets, but he also mentioned certain limits of the bank's monetary policy tools.
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USD/CHF: US Dollar Declines on Sentiment & Housing Hits The greenback failed to keep its moderate gains against the Swiss franc during the US trading session amid a risk-off mood recently fueled by fragile crude oil prices and concerns over global economy growth.
Meanwhile, traders digested weaker-than-expected US data as the number of new home sales unexpectedly dived in January. According to some analysts, the latest sluggish reading might also cut approximately 0.1% from the country's GDP during the first quarter.
''From a GDP accounting perspective, the weak tone in the new home sales report will add some modest downside risks to Q1 GDP tracking of 2.3% quarter-to-quarter on account of slower gains in residential investment. The downward revision to December's estimate also poses downside risks to the second estimate for Q4 GDP later this week,'' TD Securities macro strategist Millan Mulraine said.
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SNB's Jordan: Negative rate exemption threshold is a possible policy tool The Swiss National Bank President Thomas Jordan said the bank could lower the amount of bank reserves that are exempt from its negative interest rate if it needs to ease policy further
Jordan speaking in an interview in Shanghai (he was at the G20 meeting)
USD/CHF: A Buy On 1.00 Break: EUR/USD: A Sell On 1.08 Break - SocGen A clear break above 1.00 in USD/CHF is needed to signal further rebound towrds the next resistance around 1.0110 and 1.0160, notes SocGen.
"After breaking above multi month triangle USD/CHF found stiff resistance near last year highs of 1.0330. Since then it is undergoing a retracement and has achieved triangle limit at 0.9750/0.97.
Multi month ascending trend at 0.95 will decide if a larger downtrend takes shape. 1.00 caps short term upside," SocGen adds.
Turning to EUR/USD, SocGen thinks that a break of Feb low around 1.08 is needed to signal a revisit to 1.0570/1.05.
"After a sharp rebound, EUR/USD faced stiff resistance at upper limit of a daily channel. With weekly indicator close to resistance, graphical levels at 1.1440/60 will remain key hurdle.
It is breaching the channel support and test of early February low at 1.08 looks likely. This will confirm if a revisit of 1.0570/1.05 takes shape," SocGen argues.
USD/CHF: Dollar Remains in Drivers Seat After Swiss GDP Risk-on sentiment following upbeat US manufacturing data boosted equities, while investors' interest in safe-haven assets such as the Swiss franc faded. Better-than-expected Swiss Q4 GDP figures failed to offset the dollar rally.
The USD/CHF was seen 0.20% higher on Wednesday trading just below the psychological ₣1.00 at ₣0.9990.
Switzerland's economy accelerated in the final quarter of 2015 ignoring the currency cap removal, migrant crisis and adverse external environment developments weighed on the country's performance.
Real GDP rose 0.4% in the fourth quarter of 2015, following 0.8% growth reported in the third quarter of 2015. Market consensus had bet on 0.1% growth.
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Limits of monetary policy not reached yet - SNB's Maechler The Swiss National Bank and other central banks still have room to ease monetary policy, SNB Governing Board member Andrea Maechler told newspaper Le Temps, adding that the Swiss franc remains overvalued.
The European Central Bank is widely expected to cut its negative deposit rate again in the coming week and possibly step up its bond buying, which could heap pressure on the SNB as it tries to rein in the Swiss franc.
Asked about market expectations of action by central banks in Switzerland and around the world, she said:
"Expectations are high, it's true. We have not reached the limit of monetary policy, but this does not mean that it is unlimited. But we have seen in the United States with the quick cleanup of banks and the credit sector: When monetary policy is well supported by other political action, it can go further."
In the interview released ahead of publication on Monday, she said the SNB acted in the interest of the entire country, adding: "But it is a fact: Monetary policy cannot do everything. It cannot replace structural reforms. It cannot force companies to adapt."
The SNB uses negative deposit rates and a readiness to intervene on currency markets when needed to try to keep a lid on the franc, which Maechler said remained overvalued despite its weakening since last summer.
"We are moving in the right direction. Negative rates are playing their role in making holding francs less attractive," she said, although it was hard to quantify their effect.
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