MNI Analysis shows that it's too soon to......>

SWISS: MNI Analysis shows that it's too soon to say the CHF has bottomed:

-CFTC data shows traders hold the largest net short CHF position since 2007 and

the proximity to the Vollgeld monetary reform vote on June 10th will cap any

near-term rallies.

-The shift in positioning has prompted MNI's FX Positioning Indicator for the

CHF to fall to the lowest level in years.

-The 'Vollgeld' vote should keep any near-term CHF rallies capped. The

macroeconomic impacts of the Vollgeld reforms (the conversion of domestic bank

deposits into liabilities with the central bank) are incredibly unclear and

dependent on the government/central bank response. They would inevitably mean

material changes to the Swiss economy, best summarised by the central bank's

President Jordan: "The initiative raises unrealistic expectations... it is an

unnecessary and dangerous experiment". Opinion polling leaves little chance of

an overhaul of the monetary system, but many traders will have learnt the hard

way not to over-trust surveys in recent years and, as a result, CHF rallies may

be short-lived. See MNI Analysis Email for full details.