The value of the CHF has changed dramatically over the last few weeks, not just due to post Brexit UK PLC remaining unclear but also CHF demand as a safe haven currency due to the Deutsche Bank crises. This has weighed on the single currency and undermined risk appetite across global markets.

The CHF also benefits from its safe haven status so in times of uncertainty, like the political race in the US, results in additional demand for the currency and its value climbs. As we enter the last 2 months of the presidential race I expect this fluctuation to remain to be seen. Timing a £200,000 transfer buying CHF over the last 7 days well or poorly would have made a difference of over 1.5% or nearly CHF3,800.

The value of the CHF has changed dramatically over the last few weeks, not just due to post Brexit UK PLC remaining unclear but also CHF demand as a safe haven currency due to the Deutsche Bank crises. This has weighed on the single currency and undermined risk appetite across global markets.

The CHF also benefits from its safe haven status so in times of uncertainty, like the political race in the US, results in additional demand for the currency and its value climbs. As we enter the last 2 months of the presidential race I expect this fluctuation to remain to be seen. Timing a £200,000 transfer buying CHF over the last 7 days well or poorly would have made a difference of over 1.5% or nearly CHF3,800.

In the near term CHF Consumer Price Index (CPI) is released tomorrow morning. Swiss consumer prices has fallen on an annual basis for the past two years, probably due to most nationals being able to cross over a border and buy goods at a cheaper rate. This release however is expected to show a slight improvement and therefore I would expect the CHF to get more expensive through today in the build up to this event. As a result if you are a CHF buyer it may be prudent to trade sooner rather than later to avoid unnecessary losses.

The negative trend that has been seen in inflation is a problem for the Swiss National Bank (SNB) as they are targeted to keep inflation below 2%. Traditionally central banks would aim to cut interest rates to fight this however the SNB already has one of the deepest negative policy rates in the world, they currently have a -0.75% rate on bank deposits stored with the bank overnight. Due to this potential process having ‘expired’ the SNB has been using their own cash to buy foreign currency, changing demand and therefore its currencies value to help their exports. This practice has been used for a number of years now by the bank but was becoming too expensive, so the bank cancelled a limit that it had implemented to keep the CHFEUR level within. This is turn is why they have been selling CHF and buying foreign currencies to try and impact the value of the CHF. These repeated interventions over the past few years have however left the central bank with a balance sheet (cash reserve) that is bigger than the entirety of Switzerlands entire economy, mostly in foreign currency.

The SNB is widely expected to have intervened in this manner only at the end of last week as GBPCHF levels fluctuated by over 1% through Thursday and Friday, falling and then recapturing the losses in a similar pattern that we have seen before. It is a scenario that I personally expect to be seen used continually and can often give clients the best levels.

The Swiss Franc is likely to strengthen further due to uncertainty elsewhere, speak to our brokers today if you are considering buying the Swiss Franc in the near future.

In the near term CHF Consumer Price Index (CPI) is released tomorrow morning. Swiss consumer prices has fallen on an annual basis for the past two years, probably due to most nationals being able to cross over a border and buy goods at a cheaper rate. This release however is expected to show a slight improvement and therefore I would expect the CHF to get more expensive through today in the build up to this event. As a result if you are a CHF buyer it may be prudent to trade sooner rather than later to avoid unnecessary losses.

The negative trend that has been seen in inflation is a problem for the Swiss National Bank (SNB) as they are targeted to keep inflation below 2%. Traditionally central banks would aim to cut interest rates to fight this however the SNB already has one of the deepest negative policy rates in the world, they currently have a -0.75% rate on bank deposits stored with the bank overnight. Due to this potential process having ‘expired’ the SNB has been using their own cash to buy foreign currency, changing demand and therefore its currencies value to help their exports. This practice has been used for a number of years now by the bank but was becoming too expensive, so the bank cancelled a limit that it had implemented to keep the CHFEUR level within. This is turn is why they have been selling CHF and buying foreign currencies to try and impact the value of the CHF. These repeated interventions over the past few years have however left the central bank with a balance sheet (cash reserve) that is bigger than the entirety of Switzerlands entire economy, mostly in foreign currency.

The SNB is widely expected to have intervened in this manner only at the end of last week as GBPCHF levels fluctuated by over 1% through Thursday and Friday, falling and then recapturing the losses in a similar pattern that we have seen before. It is a scenario that I personally expect to be seen used continually and can often give clients the best levels.

The Swiss Franc is likely to strengthen further due to uncertainty elsewhere, speak to our brokers today if you are considering buying the Swiss Franc in the near future.

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