The potential for political turmoil in European elections this year is keeping the Swiss National Bank alert for threats to the franc, according to SNB chair Thomas Jordan.
Citing elections in Germany and France, possible instability in Italy, and questions about Brexit and U.S. trade policy under President Donald Trump, the SNB chief warned that “such periods of increased political uncertainty are always delicate for us because Switzerland is increasingly viewed as a safe haven.”
A surge in populism ahead of the elections in Europe, as well as the U.K. and U.S.-related risks, have pushed the franc up 2.5 pct against the euro in the past six months. The currency has averaged above 1.07 per euro this year, compared with less than 1.09 in 2016.
Speaking with Schweiz am Wochenende newspaper, Jordan reiterated that the franc remains “significantly overvalued” and pledged to maintain the central bank’s expansive monetary policy of negative interest rates and intervention threats.
Those currency interventions may already be taking place, according to BNP Paribas’s Steven Saywell, who says the franc is the best way to trade the French elections.
“We’re back to the scenario where the Swiss franc is the safe haven,” Saywell, global head of foreign-exchange strategy, told Bloomberg Television’s Francine Lacqua on Friday. “We’ve seen the Swiss franc appreciate. The Swiss National Bank’s had to intervene to prevent further appreciation.”
Still, the SNB is ready for future upsets, Jordan told the paper: “We still have enough leeway with our instruments to react to further shocks.
Hedging Outlook:
An option short in USDCHF also serves to hedge an interest rate shock to risk markets and the reflation trade. There’s a risk premium mismatch in EUR – plenty in options, none in the spot. This favors covered puts ahead of the French election but only in those pairs that are in a fundamental downtrend– we have this on in EURCHF and now sell a put on EURSEK against existing cash short.


JPMorgan CEO Jamie Dimon Warns Mythos AI Raises Cyber Risk Tenfold
BOJ Raises Interest Rate to 31-Year High as Yen Weakens
Cardano Price Surges 10% as ADA Targets $0.30
BofA Raises Coinbase Stock Target to $203 on Stablecoin Growth
RBI Rate Hike Bets Surge as Inflation Rises
Bitcoin Price Falls Below $83K as Liquidations Hit $697M
Robinhood Buys $25 Million in Bitcoin for Corporate Treasury
RBI Uses $10 Billion Currency Swaps to Drain Excess Rupee Liquidity
RBA Set for September Rate Hike as Inflation Stays High
Fed’s Hammack Says Bond Yield Surge Is Not Driven by Inflation Fears
Litecoin Marks 15 Years as Grayscale Backs LTC ETF Push
Kalshi Withdraws PEPE Perpetual Futures Filing




