SNB Happy on the sidelines

The SNB is not moving, unwilling to disrupt the markets current narrative. From the SNB vantage point macro and domestic conditions are in a sweet spot for current policy. Inflation rates have improved but are nowhere near the SNB target rate while the short CHF is on most analyst top calls for 2018. All the while growth outlook has improved, led by export and manufacturing, supported by the weak CHF. The SNB will remain on the sideline, keeping rate unchanged and reiterating its pledge to intervene in the FX markets is needed.

SNB members will continue to sound cautions on exchange rate believe the CHF remain overvalued. Despite the improving backdrop its unlikely the SNB will get ahead of the ECB in tighten. This would put the first hike well into 2019 indicating that current pricing it too optimistic. We remain long on EURCHF.

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This report has been prepared by AC Markets and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by AC Markets personnel at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.