8 Dec 2014
SNB to strongly commit to exchange rate floor – Nomura
FXStreet (Barcelona) - According to the Nomura Research Team, the probability of policy changes from the SNB remains high as EUR/CHF continues to trade soft.
Key Quotes
“As EUR/CHF continues to trade weakly, staying close to the exchange rate floor, the possibility of policy responses by the SNB remains high. We expect the SNB to continue to commit firmly to the exchange rate floor, as widely expected. There are three areas to watch: (1) any decision on negative rates, (2) the inflation forecast, and (3) any confirmation of FX intervention at the press conference.“
“As the introduction of negative rates and the confirmation of FX intervention could send CHF weaker, we judge the riskreward trade is to be long EUR/CHF into the meeting, while upside room for EUR/CHF is also relatively limited ahead of the ECB’s expected introduction of sovereign QE.”
Key Quotes
“As EUR/CHF continues to trade weakly, staying close to the exchange rate floor, the possibility of policy responses by the SNB remains high. We expect the SNB to continue to commit firmly to the exchange rate floor, as widely expected. There are three areas to watch: (1) any decision on negative rates, (2) the inflation forecast, and (3) any confirmation of FX intervention at the press conference.“
“As the introduction of negative rates and the confirmation of FX intervention could send CHF weaker, we judge the riskreward trade is to be long EUR/CHF into the meeting, while upside room for EUR/CHF is also relatively limited ahead of the ECB’s expected introduction of sovereign QE.”