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15 Jan 2015
SEB: Did SNB cut rates due to euro risks ahead of ECB? - eFXnews
FXStreet (Barcelona) - The eFXnews Team shares SEB’s view on the recent SNB’s decision to let go of its EUR/CHF floor, with SEB viewing that the SNB action was against a probable risk of a weaker euro ahead of the upcoming ECB meeting.
Key Quotes
“We assume that that the SNB has realized that relative monetary policy is crucial for exchange rates and policy easing by the ECB has weakened the EUR and the CHF substantially against the USD since last summer while inflows to Switzerland has increased and the central bank expects this trend to continue.”
“Markets reacted with a initial huge appreciation of the Swiss franc against all major currencies. EUR/CHF was down to 0.8517 before stabilising at 1.05. Where the EUR/CHF exchange rate will stabilize is impossible to say.”
“The CHF is long-term overvalued from a fundamental stance at any level below the floor. However the attractiveness of the CHF in the context of the Euro zone crisis and the risk of further easing by the ECB as broad based government bond purchases will main the downside pressure in EUR/CHF.”
“The SNB decision today should probably be viewed against the risks the ECB will launch new measures at the upcoming meeting on January 22, which will weaken the euro even further.”
This content has been provided under specific arrangement with eFXnews.
Key Quotes
“We assume that that the SNB has realized that relative monetary policy is crucial for exchange rates and policy easing by the ECB has weakened the EUR and the CHF substantially against the USD since last summer while inflows to Switzerland has increased and the central bank expects this trend to continue.”
“Markets reacted with a initial huge appreciation of the Swiss franc against all major currencies. EUR/CHF was down to 0.8517 before stabilising at 1.05. Where the EUR/CHF exchange rate will stabilize is impossible to say.”
“The CHF is long-term overvalued from a fundamental stance at any level below the floor. However the attractiveness of the CHF in the context of the Euro zone crisis and the risk of further easing by the ECB as broad based government bond purchases will main the downside pressure in EUR/CHF.”
“The SNB decision today should probably be viewed against the risks the ECB will launch new measures at the upcoming meeting on January 22, which will weaken the euro even further.”
This content has been provided under specific arrangement with eFXnews.