Is Switzerland on President Trump’s hit list?

Share On Facebook
share on Linkedin

With President Trump seemingly shaking up the conventional strong dollar policy, the markets are trying to rationalise how this will work and who it will affect the most. It seems highly apparent that any country with a large current account surplus with the U.S may get hit by Mr Trump’s ire.

Aside from those countries already attacked, there are smaller nations with major current account surpluses and we think it’s interesting to take a look at Switzerland. More specifically EUR/CHF highlights how active the Swiss National Bank (SNB) has been in foreign exchange markets recently.

On 15 January 2015, the SNB stunned markets by lifting the minimum exchange rate of 1.20 per euro which had been in place for three and a half years. Since then, even though the bank does not officially comment on currency intervention, it is well known that the SNB is highly active in keeping the strength of the CHF down.  Indeed, we note that the phrase ‘it therefore reaffirms its willingness to intervene in the foreign exchange market’ appears nine times from March 2015 on the Chronicle of Events on the SNB’s website!

Of course in this current period of volatility and safe haven flows, the SNB is stuck in somewhat of a bind. Elevated equity markets should mean the CHF is weaker all things being equal. And yet, there is ongoing demand for the Franc in market risk-off moves, no doubt to the consternation of the SNB. In addition, stubbornly low core EUR inflation may continue to weigh on EUR/CHF.

Looking at the daily candle chart below, the bearish outlook has strengthened considerably whilst prices keep below the 30 December high around 1.0763. Subsequent price action has hunted for the 2016 Brexit low of 1.0624 but has been rebuffed so far.

This battle between the SNB and the market will as always, be fascinating. Add in Mr Trump’s potential ‘soft’ dollar policy and things get even more interesting.

Faraday Research offers real time FX and Equity trade signals from qualified analysts. Click here to try us free.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

Do you want to write for our Newspaper? Get in touch:

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20211027 01:33:49