by George Dorgan
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A currency trader should always remember that main stream banks have a tendency to buy in the central bank’s position so that financial markets “can function properly”. Especially in 2011/2012, but also recently most bank research thinks that EUR/CHF will appreciate.
December 2013: “Where Would the EUR/CHF Exchange Rate Be Without the SNB’s Minimum Exchange Rate” A paper by Michael Hanke (University of Liechtenstein),Rolf Poulsen (University of Copenhagen), Alex Weissensteiner (Free University of Bolzano/Bozen).
The paper does not take into account fundamental factors, but mostly put/call ratios.
Q3/2013: UBS’s Outlook Switzerland (in German) maintains that only “phantasy” about higher ECB rates can raise the EUR/CHF rate. For UBS the reason for move of EUR/CHF 1.26 in May was the extremely bad situation in Europe, and not hopes in rate hikes. For UBS, the EUR/CHF will remain in tight ranges between 1.21 and 1.23 for a longer time.
As long as the SNB remains on hold and EZ dissolution fears continue to fade, CHF will continue to weaken over the next few months.
— Roubini Global (@RoubiniGlobal) August 19, 2013
May 2013: Bank Edmond de Rothschild: SNB should abandon floor rate to cool property prices
November 2012: Univ. Zurich, M. Lamla, Prof. Jan_Egbert Sturm, in VoxEU Swiss National Bank under Attack
–> Here our response: The Swiss Trade Surplus Unveiled
September 2012: Univ. Berkeley, Chen & Eichengreen: The Implication of the Exchange Rate Floor in Current Times
September 2012: Credit Suisse “Switzerland’s Little Economic Miracle “
June 2012: UBS on the EUR/CHF floor, here also on FT, with a reference to our blog.
May 2012: Nordea on the Swiss franc.
For a general FX overview we strongly recommend the FX Pulse of Morgan Stanley. Here a google link to retrieve the latest edition (without institutional subscription).
More Bank Research can be found here.
Further suggested readings are the followings:
Swiss Monetary Targeting 1974-1996: The role of internal policy analysis
Georg Rich (2001), former SNB chief economist, on why Swiss monetarist theories seem to be abolished.
Georg Rich (2005), on why GDP is no good measure for Swiss growth, but also the Gross National Income GNI should be considered.
