Swiss franc may be on cusp of significant rise
Nov 19 (Reuters) -The Swiss franc may be on cusp of a significant rise where the central bank manages its appreciation but no longer tries to prevent it.
Switzerland's trade surplus ballooned to a record 8.06 billion francs in October, far above the prior record of CHF 6.3 billion, and 3.2 billion larger than September's surplus.
For the Swiss, this enormous rise could not be more poorly timed with respect to the potential reaction from the United States, which is likely to see the boom as the result of currency manipulation.
In the past two months Swiss FX reserves have leapt by 25 billion francs, which is indicative of heavy intervention, and reserves have risen by 77 billion in the past year.
Before the recent surge in reserves, EUR/CHF had dropped to a multi=year low at 0.9214 EBS, with the central bank seemingly intent on paring its massive holding of foreign currencies. If the pair had maintained the slide below 0.9250, or should ever do so, then it should revisit the record low.
In the wake of the news of a record surplus that may influence a change in policy necessary to avoid a trade dispute with the U.S, the franc may rise. Given the close proximity to such an important level, this may well result in the break that sets off a slide toward the all-time low at 0.8500.
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EURCHF https://tmsnrt.rs/3AZSyAp
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(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)
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