8 Apr 2015
SNB to ease further, CHF appreciation pre-condition - Nomura
FXStreet (Bali) - Nomura FX Strategy Team expects the SNB to ease monetary policy further, but only when CHF appreciation pressure intensifies.
Key Quotes
"The fact that EUR/CHF undercut 1.05 towards the end of the month may have spurred the SNB to take some action, but that is pure speculation at this point as the SNB’s communication is limited on the matter. SNB officials have repeated that the Bank can intervene in the FX market when necessary, but they have not specified any level to protect. In addition, the signals from sight deposits were limited, while deposits increased during the week ending 27 March when EUR/CHF depreciation accelerated on 24 March."
"We still think the SNB will likely ease monetary policy further, but only when CHF appreciation pressure intensifies further. The IMF recently advised in its Article IV presentation that monetary easing could perhaps be achieved via a programme of preannounced asset purchases, but the SNB may still be in a “wait and see” frame of mind. Nonetheless, this number will likely revive market concerns about SNB intervention when EUR/CHF is below 1.05, which could limit downside risk for EUR/CHF in the near term."
Key Quotes
"The fact that EUR/CHF undercut 1.05 towards the end of the month may have spurred the SNB to take some action, but that is pure speculation at this point as the SNB’s communication is limited on the matter. SNB officials have repeated that the Bank can intervene in the FX market when necessary, but they have not specified any level to protect. In addition, the signals from sight deposits were limited, while deposits increased during the week ending 27 March when EUR/CHF depreciation accelerated on 24 March."
"We still think the SNB will likely ease monetary policy further, but only when CHF appreciation pressure intensifies further. The IMF recently advised in its Article IV presentation that monetary easing could perhaps be achieved via a programme of preannounced asset purchases, but the SNB may still be in a “wait and see” frame of mind. Nonetheless, this number will likely revive market concerns about SNB intervention when EUR/CHF is below 1.05, which could limit downside risk for EUR/CHF in the near term."