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13 Nov 2014
CHF (& AUD) – intervention? – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank sees the SNB, the AUD and the NZD as among those central banks that openly admit to the role of currency in determining monetary policy conditions.
Key Quotes
“November 30 could be an instrumental date with respect to the effectiveness of FX intervention by the SNB, due to the referendum on the central bank’s gold reserves which are scheduled for that date.“
“As its stands the SNB is committed to maintaining a EUR/CHF1.20 floor to prevent further appreciation of the CHF. Only yesterday SNB President Jordan commented that “the cap (on the value of the CHF) remains the most important instrument for keeping prices stable and deflation at bay.””
“For a number of monetary authorities faced with interest rates close to or at zero, the value of the currency has become an increasingly important variable in determining monetary policy conditions. The SNB, the AUD and the NZD are among those central bank that openly admit to this; others such as the ECB and BoJ are far less candid.“
“Not only is the SNB attempting to keep its currency under pressure but overnight RBA official Kent stated that Australia’s central bank had not ruled out intervention to push its currency lower.”
“Currently, there is too much uncertainty connected with the outcome of the Swiss gold initiative to anticipate a break in the SNB’s peg. That said, EUR/CHF is likely to remain close to its floor during the next couple of weeks.”
“Meanwhile accommodative policies elsewhere are likely to keep the USD well supported.”
Key Quotes
“November 30 could be an instrumental date with respect to the effectiveness of FX intervention by the SNB, due to the referendum on the central bank’s gold reserves which are scheduled for that date.“
“As its stands the SNB is committed to maintaining a EUR/CHF1.20 floor to prevent further appreciation of the CHF. Only yesterday SNB President Jordan commented that “the cap (on the value of the CHF) remains the most important instrument for keeping prices stable and deflation at bay.””
“For a number of monetary authorities faced with interest rates close to or at zero, the value of the currency has become an increasingly important variable in determining monetary policy conditions. The SNB, the AUD and the NZD are among those central bank that openly admit to this; others such as the ECB and BoJ are far less candid.“
“Not only is the SNB attempting to keep its currency under pressure but overnight RBA official Kent stated that Australia’s central bank had not ruled out intervention to push its currency lower.”
“Currently, there is too much uncertainty connected with the outcome of the Swiss gold initiative to anticipate a break in the SNB’s peg. That said, EUR/CHF is likely to remain close to its floor during the next couple of weeks.”
“Meanwhile accommodative policies elsewhere are likely to keep the USD well supported.”