CHF Currency Report | Dec 17th 2020
The Swissie (CHF) has appreciated 0.76% this week to $1.131/USD against a weaker US dollar, today reaching its strongest level since January 2015. The CHF|USD pair saw monthly volatility at 1.89%, and annual volatility at 6.55%, as seen on Deaglo’s spot history chat below. If your business or fund is exposed to this pair, implementing a layered hedging strategy can reduce your annual volatility down to 1.65%, making forecasting profits far more accurate.
Macroeconomic data front | the Balance of Trade for November increased to CHF3.1B, from CHF2.9B the month prior. The current surplus is bad news for the CHF as it could affect the supply for foreign exchange. The high demand for CHF could result in further appreciation. This is bad news for Switzerland’s large export business who has struggled with a strong CHF since March 2020.
The SNB announced this morning that interest rates would remain at -0.75% (the lowest in the world according to Reuters), in order to combat negative inflation rates plaguing Switzerland’s economy since February 2020. Switzerland is no stranger to negative inflation, as seen in the graph below.
Upcoming events likely to influence the CHF are:
Current Account Q3 (due 18 DEC);
SNB Quarterly Bulletin (due 23 DEC)
SNB | Yesterday, the U.S. Treasury labeled Switzerland a currency manipulator. However, the Swiss National Bank seemed unphased at the title of “currency manipulator”, promising on Thursday to push forward with their expansive monetary policy and forex interventions in order to soften the impact of the coronavirus pandemic. SNB Chairman Thomas Jordan confirmed the central bank had made “considerable foreign exchange purchases this year,” but remained silent on the degree of interventions during the latter half of the year. Read more here.