Swiss franc skeptic on SNB’s rumors of rate cut

Market is emphasizing to turn the KOF leading indicator, the expectation is an increase for a second month in a row to 91.5 from 90.8. But then, as per our rationale such readings remain rather subdued and about to signal downside risks to Q1 GDP figures due to an overrated exchange rate.

FX market participants recovered interest in the Swiss franc last week after the SNB reduced the group of sight deposit account holders that are exempt from negative interest rates. Crucially, sight deposit data on last Monday will add substantial awareness given the recent increase as the market continues to see them as a proxy of SNB intervention.

Other key events to focus on include the central bank's Q1 currency allocation statistics and its Q1 earnings both on Thursday. On the FX side, we repeat our sight that further measures in the form of FX interventions and further interest rate cuts may be used under a scenario of a sustained CHF rally.

However, one can still seek opportunities in intraday swings of USDCHF pair, but not on closing basis. This has shown crossover occurred at below 20 levels which is an oversold scene. Currently the pair is trading at 0.9570 on spot.