The Swiss National Bank (SNB) released their latest deposit accounts yesterday morning with interesting reading. In the release it confirmed that the amount on the books of the SNB rose by 1.7 billion francs to a record of 581 billion last week.

Currency Pair% Change (Month)Difference on £200,000
GBPCHF3.1%CHF 7,300

This increase suggests that the SNB was again actively looking to weaken its currency which is widely seen as a safe haven currency. As the FED and the ECB both suggest that they are looking to weaken policies the CHF has been going up in demand, pushing its value up which reached a two-year high against the euro last week. To counter this the SNB has been buying foreign currencies with newly created francs to ease the upward pressure on the local currency. “I think the SNB was intervening in the market last week — this was the biggest weekly increase in sight deposits since May 2017. This is a clear sign the SNB was active in the market,” said Credit Suisse economist Maxime Botteron.

business confidence within Switzerland has been falling

How an ECB interest cut could benefit the Swiss franc

Any confirmation by the European Central Bank in loosening its own monetary policy may reduce the interest rate gap between Switzerland and the eurozone, making the franc more attractive. As a result, this could be a sign of more intervention to come in the future and something to watch if you have exposure to the CHF.  Generally business confidence within Switzerland has been falling and this was confirmed once more today with their latest data release, the KOF Swiss Leading Indicator which dropped again.

On Thursday Purchase Management Index is released and on Friday Consumer Price Index. Both are expected to show a contraction as concerns about the wider economic activities continues to have an impact. FX Street expect Consumer Confidence data on Friday to drop to negative territory which historically has caused movement for the currency making it cheaper to buy.

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