With the release earlier of the SNB reserves which showed the highest rise for six months are we to assume that they might be getting a little anxious about the EURCHF peg?
Foreign currency reserves were reported at CHF 438.3 billion in March, up from a revised CHF 430 billion in February.
The 1.2000 floor in EUR/CHF was set in September 2011 when the SNB said it would buy the Euro using an unlimited supply of Swiss Francs, and the currency pledge was reiterated by the central bank in its March meeting.
When things were looking a little rosier in the Eurozone ( remember those halcyon days last year ?) the SNB could give the pair a kick higher and then sit back and watch EURCHF climb further and even had the added luxury of selling its Euros into every decent EURUSD rally. Nice work.
But this year things are a little different and with the recent Eurozone woes and EURUSD decline we’ve seen pressure again on EURCHF. The SNB won’t be panicking just yet but they’re too clever to let it go down too far.
Keep an eye on this pair.
