During yesterday’s session, there were high expectations for the scheduled SNB member speeches; where it was speculated that Jordan and Hildebrand might hint at a new exchange rate floor for EURCHF. After the very weak Swiss CPI numbers seen earlier this week, many had suggested that a new 1.3000 or 1.4000 floor could be on the way. However, no evidence to support this was forthcoming from the two speakers, and as such we saw EURCHF drop sharply from 1.2440 levels back to 1.2320. SNB Vice Chairman Jordan did acknowledge that the CHF was overvalued and should weaken, but clarified that a precondition for further easing would be “enormous deflationary pressure”, and that it would be wrong to engage in competitive devaluation. These comments seemingly acknowledged that the SNB is not yet ready to intervene again in the currency and that in spite of the October CPI figures slipping into negative territory (at -0.1% YoY), the deflationary risks are not yet severe enough to warrant a rise in the 1.2000 EURCHF floor.
“small step for man”