The franc is the strongest performing major currency today
The franc is tracking higher against the rest of the major currencies bloc as equities stay mixed alongside more tepid bond yields during the European morning. But it is also getting an added lift from remarks by the Swiss government regarding currency manipulation.
Switzerland’s State Secretariat for International Finance has released a statement saying:
“It’s to be stressed that Switzerland doesn’t manipulate its currency in any way to achieve an adjustment in its balance of payments or an unjustified competitive advantage.”
It is a response to the US Treasury report earlier today after Switzerland has been added to the currency watch list. In my view, this is a bit of a “for show” reply and just to appease US authorities. It is akin to a courteous act more or less, not really one of much meaning.
But at the same time, the franc is moving after the statement so perhaps it is giving buyers a bit of an incentive to push the issue amid fears of the SNB intervening.
From a technical perspective though, EUR/CHF is in a precarious spot no after now firmly breaking the September low around 1.0811.
There isn’t much support on the way towards 1.0635-40 next and with the SNB needing to be wary about the US looking over its shoulder, Jordan & co. are put in a really tough spot – more so if we do see a significant retracement in global stocks down the road.