Thursday, January 29, 2015

CHF Rates now steady...

SNB has laid off pressing on this rate in the -0.8% to -0.9% range; probably leaving themselves room to lower further if (to them) they think this is somehow necessary.

I'd assume that now the CHF exchange rate is in the hands of the Swiss exporters and their bankers; now that the SNB has stepped away from actively pressing on this rate.

If the Swiss exporters cave on price in order to maintain share in their export markets, then the CHF should weaken vs. the currency of the specific export nation.

USD/CHF has broken out firmly above 0.90 over the last few days and seems to be headed back towards where it was before the big policy adjustment on the 15th; which would indicate that Swiss firms are starting to reduce prices for their products a bit in USD terms to their US customers and cannot hold the increased prices in USD terms that the new policy rate imposed.

Due in no small part to the present stingy fiscal backdrop here in the US, "money is too tight" for anyone to think that they could impose an over night 15% price increase in USD terms with impunity.


mike norman said...

Nice call, Matt. USD/CHF rebounded just as you forecast. Still likely to go higher as Swiss firms begin to cut prices.

mike norman said...

USD/CHF already recovered half the ground lost when the Swiss National Bank ended their peg.