Swiss National Bank

The Franc eased lower against most currencies in the wake of December’s Swiss National Bank policy assessment but its recent appreciation is a long way from over.

The Swiss Franc was little changed against the Dollar and Pound on Thursday following the March monetary policy decision of the Swiss National Bank (SNB), which has left the outlook for USD/CHF hinged on the recovery prospects of the all-important EUR/USD and EUR/CHF exchange rates.

The Franc appeared to reach an intermediate plateau in its year-to-date descent on Friday as the safe-haven store of value slipped in front of Sterling and the Swedish Krona, but a looming period of divergence between central banks could be about to set the Swiss currency onto the slides again as soon as next week. 

The Swiss Franc was universally stronger on Friday if not for an unchanged USD/CHF that is at the centre of a looming confrontation between Bern and Washington, which is itself a symptom of broader global problem and a warning of growing risks that lurk along path ahead for other currencies.

The Swiss Franc remained the best performing major currency of 2020 on Friday even as it underperformed intraday, although Swiss National Bank (SNB) intervention is likely to keep the Euro-to-Franc rate above the year’s lows, according to Capital Economicsand Commerzbank, even if its recovery prospects are uncertain. 

The Franc was left struggling Thursday after the Swiss National Bank (SNB) reiterated a threat of intervention on behalf of the economy and in the name of domestic inflation, although the nearing U.S. election and ongoing Brexit process are tipped to see the safe-haven currency recover before long. 

The Swiss Franc's relentless rally against the Dollar will come to an end at the same time as the Euro-Dollar rate turns lower although when USD/CHF does reverse higher it could possibly be at the instigation of the Swiss National Bank (SNB). 

The GBP/CHF rate has built on gains made after Theresa May's leadership win this Thursday, aided by a negative diagnosis on the Franc from the Swiss National Bank (SNB), but this upward move may not be sustained.

The CHF is under sustained upside pressure as investors increasingly seek the franc for its safe-haven attributes ahead of the UK’s EU vote - something that may only increase in the event of Brexit.