Turbulences on franc course. Did SNB manipulate him this week?

Recent Swiss franc behavior may have suggested SNB's return to politics "Upper ceiling". Strong CHF appreciation against other major currencies, apparently, is not on hand Central Bank of Switzerland. From memorable On Black Thursday, 5 years have passed. Exactly then, the SNB ceased interfering with the CHF course, which caused its strong strengthening over time (mainly in EUR i USD). We can observe appreciation movements against the euro practically since May 2018.

Be sure to read: Black Thursday - 4 years after SNB intervention. What has this taught us?

Why does SNB not want a strong franc?

Representatives of the Swiss Central Bank since the proverbial "release" of the course five years ago, in January 5, announced that they are ready to directly intervene in the CHF course if necessary. Did SNB actually use this opportunity during this time? It is hard to determine due to the "range" of the course, but we will not conspire or argue about this topic.

The low interest rate environment, which has been strongly cared for by the Swiss Central Bank since 2015, is to discourage citizens from investing their money in francs. A strong national currency necessarily affects the economy, especially exports, which are becoming less attractive as it strengthens. It is a large and important part of the Helvetian economy. Obviously, the excessive appreciation of the CHF against currencies (especially European) was in no way at hand in this matter.

End of rigid course

The whole history of the franc's policy of colloquially saying "one place" stems practically from the crisis of 2007, when the currency became a safe deposit. Without going deeper into the subject, the most important result was that Switzerland began struggling with deflation, while CHF was steadily growing.

The abandonment of the franc's exchange rate creation policy was justified by the depreciation of the currency against the dollar. Of course, five years ago, this decision caused a lot of panic that fired the CHF course.

Did SNB intervene this week?

Rumors were spreading around the currency market that the Swiss National Bank was to intervene in the market on Wednesday. The whole situation took place on EUR / CHF, which increased abruptly. Given the not-so-important (directly related to Switzerland) macroeconomic data was suspicious. This lack of motivation for such a large "natural" market demand immediately raised issues related to SNB currency intervention.

Chart EUR / CHF, M30 interval. Source: xNUMX XTB xStation

Interestingly, the rate after a strong demand movement simply returned to normal. On the one hand, such an impulsive or unfounded market reaction may give rise to speculation about SNB interventions, on the other hand, this is not confirmed information. We also take into account the fact that the National Bank of Switzerland through such an impulse could have introduced some confusion, purely speculative to the market. Sooner or later the rate imposed its own correction on the above demand movement, moving towards further depreciation of the euro. Nevertheless, the breakout can be treated as a light suggestion of a possible SNB policy direction in the near future.