By Michael Baker

A possible highlight of the week lands on Thursday morning with the meeting of the Swiss National Bank scheduled at 08:00 (BST). Past events have been pretty mundane affairs; however, talks are already spicing up surrounding the Bank’s possible action to curb the strength of the Swiss-franc.

In previous years we have seen the SNB maintain a peg, a method used to hold the Swiss Franc at a fixed level against the Euro. There are no expectations that the Bank will revert back to this method; however, a revision of their verbal intervention may be a way forward. The Central Bank refers to the Franc as “highly valued”, but a move back to “significantly overvalued” may prompt sellers. The SNB’s balance sheet currently stands at over 100% GDP with a large portion of assets being in FX reserves, namely Euros and US Dollars. Measures to devalue the Swiss Franc may work in their favour, as the SNB reported annual profits last year of 54 billion Swiss Francs ($55.25 billion), 49 billion attributed to its foreign currency positions.

Keep an eye open for high market volatility on Thursday morning if the Swiss National Bank intensifies its verbal intervention.

On the charts

The EURCHF continues to fall and is currently trading levels not seen since July 2017. Drawing a Fib retracement from the true low after the peg was removed back in January 2015 to the high in April 2018, we can see that we are touching the 38.2% Fib and trading within a previous breakup zone (July 2017).

EUCHF – Daily Chart – Swiss Franc Driving Up In Value


Source: ETX Capital

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