CHF Currency Report | Dec 10 2020

The Swissie (CHF) has appreciated 0.93% this week to $1.1284/USD against a weak U.S dollar, as seen in Deaglo’s spot chart below. The CHF has been upward trending from April 2019, where it has since strengthened by 15.14%. On the macroeconomic data front, the release of an accurately forecasted Unemployment Rate of 3.3% for November provided important support to the CHF remain firm against the greenback. Moreover, Foreign Exchange Reserves increased by CHF 4.2B to CHF 875.9B in November, signaling an attempt by the central bank to weaken the rocketing Swissie.

Upcoming events likely to influence the CHF are:

• SECO Economic Forecasts (due 15 DEC);

• Balance of Trade for November (due 17 DEC); and

• SNB Interest Rate Decision (due 17 DEC)

SNB | The Swiss National Bank has had a rough week. In an upcoming report from the U.S. Treasury, the SNB will likely be classed as a currency manipulating country. Large scale interventions by the SNB this year (90 billion Swiss francs) to slow the appreciation of the CHF will mean Switzerland has satisfied all criteria to be deemed a manipulator of currency. Read more here

The criteria are as follows:

• Trade surplus with the United States exceeds $20 billion

• Current account surplus of more than 2% of GDP

• Government intervention in foreign exchange markets of more than 2% of the economy’s GDP

The SNB has also been accused of lagging behind in regard to green investment, still investing 4x more in fossil fuel companies than in producers of renewable energy. There would need to be a drastic reallocation of investment in order to fulfill the terms of the Paris climate agreement, to which Switzerland is a signatory. Read more here