As the latest February reserves data from the SNB showed, the battle to deter safe-haven inflows continues. After a brief reprieve in January following the removal of the EUR/CHF 1.20, demand for CHF has again intensified with the SNB buying CHF10.9bn.
While this level of CHF defence is still considerably lower than that required before January, the February rebound will no doubt be a concern for policymakers.
Indeed with long-term unemployment still high and the number of jobless still historically high, the Swiss consumer has little to cheer about.
Meanwhile, this week’s expected deterioration in economic sentiment (KoF) will be symptomatic of similar concerns on the production side, where the (still) weak European growth outlook, and uncompetitive currency, should continue to weigh.
Swiss Sentiment, SNB CHF Defense