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CHF Crosses Continue to Press Higher

Last updated 11/8/2011 3:19 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

For the second night in a row  CHF crosses are inching higher on speculation that the Swiss National Bank will raise its floor on the EUR/CHF after yesterdays weak CPI data triggered alarms that the country is sinking into a deflation. Yesterday’s Swiss CPI printed at -0.1% versus 0.2% as the strong franc in continues to exert downward pressure in prices. Today, the SECO consumer climate report printed at -24 versus -17 the month prior, the lowest level since Q3 of 2009.

The data from the consumer front confirms a deteriorating spending climate and may prompt the SNB to become more aggressive in the  foreign exchange market. Yesterday, vice Chairman Thomas Jordan stated that, “If the franc suffers an appreciation that's no longer tolerable, then we take steps to push deflationary risks out of the way.” Mr. Jordan is due to speak again today at 8:40GMT and the market will watching carefully for any signal that the SNB may explicitly change its floor targets.

Meanwhile after consolidating for nearly two months within a narrow 1.20-1.22 band, EUR/CHF has broken out to the upside and threatens to make a run at the key 1.2500 level as Swiss authorities signal that they want to see further franc weakness. In a prepared statement today Mr. Jordan noted, “ The minimum exchange rate must not be confused with an exchange rate target,” suggesting that they would like to see the pair trade higher.  

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.