As we expected in our post “What’s this crazy movement in EUR/CHF ? SNB Floor Hike ?“, long-time investors, global macro funds and US investment banks are moving into gold and the Swiss franc again. The SNB had to buy euros and print new Swiss francs of around 5 billion francs last week, as today’s monetary data show. Given that the EUR/CHF was around 1.21, the SNB FX purchases were more expensive than previously.
There are still some FX traders who are convinced that the SNB will hike the floor to 1.22. Hence, currently both the SNB and these traders are short CHF. However, in order to balance the total trades, there must be some big accounts who are buying CHF.
We do not believe that the current movement is caused by the SNB itself, they would do an official announcement. An announcement would be much cheaper for the central bank because many FX traders would trade on behalf of the SNB and long-term investors would not pile into CHF as much as they currently do.
Moreover, a new floor would destroy some of the SNB credibility and the risks of huge losses would increase.
The EUR/CHF is trading around 1.21, exactly between floor and rumor.
These are today’s and the latest SNB money supply numbers in terms of total deposits:
September 7: 370’673 million francs
August 31: 365’976 million francs
August 24: 362’112 million francs
The explanation of the data