SNB benefits from strong EUR

The franc has depreciated palpably versus the euro in the last few days caused EUR-CHF to reach its highest level in months.

The general trend of the EUR exchange rates suggests that most of the rise in EUR-CHF is due to a strong EUR. After all, the EUR has appreciated versus other currencies, too, for example the SEK, the GBP and the USD - probably due to the recent pick-up in euro-area growth and inflation. Progress with the negotiations about a third bail-out package for Greece is another supportive factor. This situation is ideal for the SNB. 

According to Commerzbank, "The strong EUR is driving the market equilibrium EUR-CHF exchange rate upwards, which means that appreciation pressures are declining and the SNB does not need to intervene to weaken the franc any more. Of course, it cannot be excluded that the SNB uses this opportunity to accelerate the upward movement of EUR-CHF by interventions. Nevertheless, it can relax somewhat in view of the current EUR strength. Still, we doubt that the situation will last."