We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
GBP/USD
Bullish
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Mixed
More View more
Real Time News
  • Heads Up:🇺🇸 USD Retail Sales Control Group (SEP) due at 12:30 GMT (15min), Actual: N/A Expected: 0.3% Previous: 0.3% https://www.dailyfx.com/economic-calendar#2019-10-16
  • Heads Up:🇺🇸 USD Retail Sales Ex Auto and Gas (SEP) due at 12:30 GMT (15min), Actual: N/A Expected: 0.3% Previous: 0.1% https://www.dailyfx.com/economic-calendar#2019-10-16
  • Forex Update: As of 12:00, these are your best and worst performers based on the London trading schedule: 🇨🇭CHF: 0.13% 🇯🇵JPY: 0.11% 🇨🇦CAD: -0.07% 🇬🇧GBP: -0.39% 🇦🇺AUD: -0.42% 🇳🇿NZD: -0.77% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/0XwYYCRVKs
  • Heads Up:🇺🇸 USD Retail Sales Advance (MoM) (SEP) due at 12:30 GMT (15min), Actual: N/A Expected: 0.3% Previous: 0.4% https://www.dailyfx.com/economic-calendar#2019-10-16
  • Heads Up:🇨🇦 CAD Consumer Price Index (YoY) (SEP) due at 12:30 GMT (15min), Actual: N/A Expected: 2.1% Previous: 1.9% https://www.dailyfx.com/economic-calendar#2019-10-16
  • Heads Up:🇨🇦 CAD Consumer Price Index n.s.a. (MoM) (SEP) due at 12:30 GMT (15min), Actual: N/A Expected: -0.3% Previous: -0.1% https://www.dailyfx.com/economic-calendar#2019-10-16
  • For my crypto friends -- specifically to $ETHUSD ether - longer term forecast is included https://www.dailyfx.com/forex/technical/elliott_wave/eth-usd/2019/10/11/ethereum-price-forecast-ETH-USD.html https://t.co/dvux4B6Yrp
  • Got questions on #Brexit and its impact on currencies? Bring your questions to @CVecchioFX , today. 15th October at 9AM EST/ 1:00PM GMT. Only on @DailyFX Twitter and Facebook! https://t.co/gtmbhGlBDt
  • RT @RobertAlanWard: Also noteworthy in @TheEIU’s new global economic forecast is that global trade growth is significantly slower than glob…
  • video from yday's webinar -> FX Price Action Setups Around the US Dollar https://www.dailyfx.com/forex/video/live_events/2019/10/15/fx-price-action-setups-around-the-us-dollar-js53-usd-eur-gbp-jpy-aud-price-chart.html
SNB Likely Wary Of Any EURCHF Floor Even If ECB Eases Again

SNB Likely Wary Of Any EURCHF Floor Even If ECB Eases Again

2019-06-25 01:50:00
David Cottle, Analyst
Share:

Swiss National Bank, EUR/CHF Floor, Talking Points:

  • The ECB may either ease monetary policy this year, or commit to keeping current low rates for longer
  • This would probably see the Swiss Franc heading even higher against the Euro.
  • The SNB won’t like that but may not try putting a new ‘floor’ under EUR/CHF

Find out what retail foreign exchange traders make of the Swiss Franc’s chances right now at the DailyFX Sentiment Page.

The prospect of the European Central Bank joining what looks like a global swing toward looser monetary policy may please stock markets, but it won’t bring any cheer to the Swiss National Bank.

History has shown that nothing messes with that institution’s plans quite like a new commitment to easy money from the Eurozone. Obviously, such doings weaken the single currency and encourage investors to seek safety instead in the Swiss Franc. This has various knock-on effects, not least a hammer blow to imported inflation as the Franc becomes wholly overmighty.

SNB Has Tried Desperate Measures Before

So overwhelming did this panic franc-buying become back in September 2011 that the SNB stunned markets by setting a floor under the EUR/CHF rate. The central bank put all its firepower behind defending a base of EUR1.20. That resolve held until 2015 when the ECB unleashed what turned out to be a EUR2.6 trillion ($3 trillion) tsunami of Quantitative Easing. This was too much of a deluge for even the SNB to hold back, and it duly abandoned attempts to do so.

Euro Vs Swiss Franc, Monthly Chart

Now the latest Reuters poll of economists has evinced expectations that the ECB will either cut interest rates by the end of September or, at the very least, adjust its guidance to assure markets that rates will remain at current low levels for longer.

And the poor old SNB is already in a somewhat invidious position. EUR/CHF is at lows not seen since mid-2017. Swiss inflation is running at an annualized rate of just 0.6% (the SNB’s mandate is to keep it under 2%, but not that far under). The last thing it needs is another QE flood from the ECB.

Financial Relations Already Strained

Relations between Brussels and Zurich are already frayed thanks to the possibility that the European Union may remove the ‘equivalence’ which has governed financial arrangements between them. The EU has threatened to revoke Switzerland’s right to take part in its exchanges if Zurich won’t sign up to a new trade deal. The Swiss are leery, seeing in the deal threats to their high-wage economy.

Now we might debate how much the SNB, at least, would mind if the flow of Eurozone capital into Swiss stocks were halted or slowed. That might at least offer the prospect of some hiatus in the Franc’s rise. However, it seems likely on balance that some deal will come, and that Zurich won’t ultimately be frozen out.

So, will the SNB start thinking about putting a floor back in? For the moment that seems unlikely. The SNB will recall 2015’s experience all-too well. It may prefer to rely on more conventional monetary measures. The problem there is that Swiss base rates are already deeply negative. Indeed, the key sight deposit rate has been -0.75% since the middle of 2015.

As current price action indicates, even that has not been sufficient to keep investors away from the Franc.

It’s probable that this rate will have to head even lower if the ECB loosens its own policy this year. That is the more likely first response.

Only if that fails might we hear talk of a floor again. The SNB will probably be praying that an extension of forward guidance is as much as the ECB goes through with. Action would be hugely more problematic for the Swiss authorities than words.

Swiss Franc Trading Resources

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.