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Industry Calls Against CHF Strength Pressure Case for SNB Cuts

CHF
  • Earlier Reuters headlines from a Swiss Industry Group stemming from trade association Swissmem, which represent engineering and tech-linked companies. The reference to the Swiss Franc is more specific – the Swissmem President cites a “precarious” situation and sees the CHF overvalued by 5% against the EUR in PPP terms. On the potential for further CHF strength, he warns that could “exacerbate the downward spiral”.
  • The risks of a strong currency are known at the SNB, in January, Jordan recognised that “In the last couple of weeks of last year, we saw real appreciation. That makes the situation for some of our firms more difficult.”
  • This fresh call against CHF strength keeps pressure on the bank (EUR/CHF is higher by ~1.2% since Jordan’s initial comments) and argues further in favour easier SNB policy this year. The March 21st decision is considered live – with Swiss money markets pricing a decent chance of the first rate cut in Q1. Mar’24 SARON futures price a better-than-even chance of a rate cut next month, but markets have further to go before this outcome is fully priced.
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