CHF: Not Worth Crossing Jordan?
EURCHF may have sold off in Asia on Monday morning following news that negotiation on forming a new German coalition government had foundered, but that didn’t stop US firm Morgan Stanley picking long of EURCHF as one of its trades of the week. Traders will have their own views but the US firm is hoping for an eventual exit at 1.2200 while keeping a stop at 1.1520. Writing on Monday too, France’s Credit Agricole CIB also favoured “buying EUR dips, for instance against the CHF” making the point that “while policy differentials should continue to put a floor under the EURCHF, rising political uncertainty would increase the risk of the SNB considering renewed currency intervention.” “SNB President Jordan just recently reaffirmed that the policy mix of negative rates and currency intervention will continue if needed,” the French firm added.
As traders make their own computations, even if they reject the notion that EURCHF could drift higher again in coming sessions, they might anyway wish to note that Jordan will be speaking again on Thursday at 1630h London time at the University of Basel. Whatever their opinions on the Swiss franc, traders might still conclude, given that in recent weeks both the SNB’s Jordan and indeed the Swiss government have characterised the Swiss franc as “highly valued,” that the SNB governor will not change his tune on Thursday.
Written by Neal Kimberley, External Currency Analyst.