- Swiss National Bank (SNB) meets tomorrow. The Swiss Franc (CHF) has weakened more than 5% since the last they met.
- Given recent weak economic data (GDP, CPI and retail sales), the SNB has no reason to change its stance for continuing with the ultra easy monetary policy.
- SNB President Jordan is unlikely to change his rhetoric about the “significant overvaluation” of CHF
The SNB meets tomorrow, and though the CHF has weakened in recent weeks, it is still in the zone of significant overvaluation. The SNB is unlikely to do anything other than stick to its current ultra easy monetary policy.
It is telling that even after all the uncertainties cause by North Korea, EurChf is trading close to its highest levels since the 1.2000 floor broke in early 2015.
As the world starts to remove stimulus (The BoC & US Fed have already started and ECB is considering tapering options) that was implemented to cope with emergency conditions, the SNB is likely to be one of the last to exit (a toss up between BoJ & SNB).
Consequently, the Chf is likely to continue on its weakening trend for the months ahead. As long as 1.1050 is not violated, the EurChf is technically headed for 1.2000 and beyond.
Monthly EURCHF Ichimoku Chart – [Source : Investing.com]
Disclosure: I am/we are long EURCHF.