News that Credit Suisse posted better than expected earnings supportedthe Swiss Franc most of the day. The up move was most likelyshort-covering as investors still believe the Swiss National Bank wantsto see a weaker currency while deflation threatens the economy.
News that Credit Suisse posted better than expected earnings supported the Swiss Franc most of the day. The up move was most likely short-covering as investors still believe the Swiss National Bank wants to see a weaker currency while deflation threatens the economy.
A comment by Swiss National Bank Chairman Hildebrand may have inadvertently triggered a Swiss Franc rally recently. Hildebrand said “Before we look at steps like negative interest rates, you have to have patience to let the medicine work.” Some traders interpreted this comment as pro-interest rate cuts while diluting his comment late last week of possible intervention.
The comment may have been taken out of context. His statement was directly related to a question about interest rates and should not have been interpreted as an abandonment of intervention techniques to combat deflation.
The real mission of the SNB at this time is to fight inflation and keep pressure on Swiss Franc appreciation in an effort to encourage demand for Swiss exports. At this time the SNB stands poised to act in any way possible to accomplish this goal. Look to buy a dip in the USD CHF if given the opportunity.