It seems we could be in for an interesting start to the week for the Swiss franc, with key international trade data due out on Tuesday likely to dictate investor appetite for the CHF for the foreseeable.
The releases will hold particular significance as they follow SNB board member Maechler’s statement over the weekend, suggesting that the Swiss National Bank will continue to hold firm with it’s negative interest rate policy despite opposing central banks around the globe pushing rates higher as time goes on.
Maechler noted that with so much turmoil in Europe at the moment (Italian banking sector and Brexit) investors certainly do not need much of a nudge to move their funds into safe haven currencies like the Swiss franc to limit their exposure until the outlook becomes clearer.
The reason why this week’s export data ties into this is because the SNB are keen to devalue the Swiss franc as much as possible, particularly ahead of the festive period, to make sure Swiss products are not priced out of the international markets as a result of an overly inflated CHF.
If Tuesday’s data comes out inline or below market expectations then Maechler’s stance will be fully vindicated and will instantly knock back any hope of improved monetary policy, potentially leading to a slight drop in the value of the Swiss franc.
If however exports come out far higher than expected, we may see a turn in trend as there would be added pressure for the SNB to reconsider their position, potentially sparking a wave of positivity amongst investors making the CHF more expensive to buy.
Personally, I feel that it would take an extremely impressive reading for the CHF to start making notable inroads against most of it’s major counterparts. Against the pound however, the scales may well be pre-set as a result of the unnerving Brexit saga. If you are looking to purchase CHF in the short term, it might pay to get in touch with your account manager to discuss your options and limit your exposure.
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