Although the political risks have been reduced, for FX markets, this does not seem to be the case. The Swiss franc continues to rise in price even in the context of a de-escalation of Iran-US relations.
Due to the situation in the Middle East and the expected departure of the UK from the EU, the Swiss currency is advancing significantly against the euro, reaching previous highs since April 2017.
Although safe haven assets are receding after the situation eased in the Middle East, the rise in CHF means investors are still nailing.
For the month now, the franc is up 1.6% against the euro, outpacing the yen, which is almost negative this month.
The CHF has gone above the 1.08 level, which is key and is being monitored by the Swiss National Bank, which means that the likelihood of their foreign exchange intervention also rising. It was around this level in 2019 that there were rumors that SNB would come.
Early indications of this potential move would give us sight deposits data. Reaching the 1.08 level last year coincided with a sharp rise in deposits with SNB.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
Trader Martin Nikolov