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27 Jan 2015
Appreciating CHF harmful for Swiss economy – Growth Aces
FXStreet (Barcelona) - According to the Growth Aces Research Team, a strong appreciation of the CHF is harmful to the Swiss economy and may lead the SNB to cut rates further.
Key Quotes
“The Swiss National Bank vice-chariman Jean-Pierre Danthine said the bank was ready to intervene in the FX market to ease monetary policy after dropping its cap on the CHF.”
“The EUR/CHF rose to the levels not seen since the Swiss National Bank removed its cap on the currency and the EUR/CHF reached a day’s high at 1.0382. The rise was short-lived and the EUR/CHF is again near the levels observed during Asian session.”
“We should remember that the credibility of the new SNB policy is questionable. Jean-Pierre Danthine said on January 12 that the cap on the CHF at 1.20 per EUR would remain the key monetary policy tool and on January 15 the bank dropped the cap. Moreover, the SNB created a rise in risk aversion and demand for safe haven assets by abandoning the cap, which added to pressure on the EUR/CHF.”
“On the other hand, a strong appreciation of the CHF is very harmful to Swiss economy and the SNB may cut rates further. The CHF is likely to weaken on fundamental basis and long EUR/CHF and USD/CHF positions are justified, but the volatility may be very high and trading CHF is risky now.”
Key Quotes
“The Swiss National Bank vice-chariman Jean-Pierre Danthine said the bank was ready to intervene in the FX market to ease monetary policy after dropping its cap on the CHF.”
“The EUR/CHF rose to the levels not seen since the Swiss National Bank removed its cap on the currency and the EUR/CHF reached a day’s high at 1.0382. The rise was short-lived and the EUR/CHF is again near the levels observed during Asian session.”
“We should remember that the credibility of the new SNB policy is questionable. Jean-Pierre Danthine said on January 12 that the cap on the CHF at 1.20 per EUR would remain the key monetary policy tool and on January 15 the bank dropped the cap. Moreover, the SNB created a rise in risk aversion and demand for safe haven assets by abandoning the cap, which added to pressure on the EUR/CHF.”
“On the other hand, a strong appreciation of the CHF is very harmful to Swiss economy and the SNB may cut rates further. The CHF is likely to weaken on fundamental basis and long EUR/CHF and USD/CHF positions are justified, but the volatility may be very high and trading CHF is risky now.”