Switzerland and Eire have been added to the US Treasury’s monitoring record in relation to FX practices, ING’s FX analyst Chris Turner notes.
Substantial break over 0.94 requires a big SNB fee lower
“That is unwelcome consideration for the Swiss Nationwide Financial institution which faces inflation close to zero, a really robust Swiss franc and closely makes use of FX intervention as a part of its financial coverage.”
“Whereas the SNB will publicly say that this new US Treasury designation adjustments nothing in relation to FX intervention, it would definitely make life tougher. And with FX intervention doubtlessly constrained, on the margin it might favour a 50bp fee lower from the SNB on 19 June. For reference, the OIS market presently costs a 30bp fee lower.”
“EUR/CHF has been having fun with a bit help from the ECB’s end-of-cycle rhetoric yesterday. However a considerable break over 0.94 will seemingly require that giant SNB fee lower later this month.”
