With its European buddies taking a hit, the franc, as usual, followed their lead. Dollar bulls helped fill the gap on the USDCHF, allowing it to close higher for the day. After opening at 1.1060, the pair finished at 1.1129.
No major news came out from Switzerland yesterday, but SNB Chairman Philipp Hildebrand did drop some pretty amusing comments. He said that one of the problems why European banking stocks were undervalued was because of the “insufficient transparency” with regards to their balance sheet statements. Hmmm… isn’t Switzerland notorious for banking secrecy? Ha!
Hildebrand also repeated statements that were made last week, saying that the outlook for the Swiss economy looks pretty good right now. He did point out though, that the economy is still exposed to potential risks due to the ongoing European debt crisis. He said that if these problems get stuck like a Justin Beiber hit and have a “Last Song Syndrome”, it could lead to potential deflation as the Swiss franc continues to appreciate. If that happens, the SNB will have to take matters into their owns… which means that they wont let the franc appreciate!
If you ask me, all this verbal intervention is having no effect whatsoever. As I look at the charts of the EURCHF, the pair is now hitting all time lows. So much for “taking the necessary measures to ensure price stability.”!
Swiss trade balance figures will be released at 6:15 am GMT today. The report is projected to show a surplus of 1.97 billion CHF for May, slightly less than April’s figure of 2.02 billion CHF. With the franc appreciating so much in recent weeks, I wouldn’t be surprised if we saw a weaker than expected number. Remember, a stronger currency makes exports more expensive relative to other competing nations. With the euro tanking in the past couple of months, the euro zone may have taken away from some of Switzerland’s exports.