SNB not yet ready to weaken CHF – Commerzbank

The figures released yesterday morning on the foreign exchange operations of the Swiss National Bank (SNB) in the second quarter confirmed what the statements made at the last press conference had already indicated, notes Michael Pfister, FX analyst at Commerzbank.

SNB reluctant to take action against strong franc

“For now, the SNB appears to continue to rely mainly on the key interest rate as its preferred instrument, with interventions even lower than the already quite low level in the first quarter. And this despite the fact that in the first quarter the SNB could have been assumed to be late in switching to foreign currency purchases, i.e. it first bought CHF and then sold CHF later in the quarter, thus distorting the quarterly aggregate. . In short, the SNB seems reluctant to take stronger action against the strong franc, at least for now.”

“Although the data is released with a long delay and the picture may look different in the third quarter, the current focus of the SNB on the monetary policy rate as a means of combating the strong franc – and the fact that most market participants are aware that the scope for rate cuts are much more limited here than in other G10 currencies – suggesting that the scope of the franc’s weakness is also more limited than recently thought.

“The SNB must therefore hope for a stronger euro and US dollar if it wants to see higher EUR/CHF and USD/CHF levels.”