EUR/CHF & Pre-Fed Positioning

The Fed decision, Brexit, the G20, BOJ and Merkel are getting all the attention this week but the whippy moves in EUR/CHF point to Thursday's SNB decision as a main event. The pound is the worst performer so far today (since Monday's NY close) after having outperformed all curencies on Monday. A new video for Premium subscribers has been posted (below) on the Pre-Fed trading regarding USDJPY and the existing EURUSD trade.

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So what's going on with the Swiss franc? The euro gained had gained more than 200 pips against the franc since the start of the month but half of that was erased on Monday. The moves have awoken what was a sleepy trade.

That has come in tandem with recent rises in sight deposits, which can indicate intervention. Adding a kink was that Monday's weekly data showed sight deposits down. That was released around the same time that the Swiss stats office bumped its CPI forecast to +0.5% from +0.3%.

The thinking goes that SNB and investors remain worried about the elections--Dutch vote Wednesday and the French elections at the end of April. They could fight back by cutting interest rates but that's a tough argument to make with inflation forecasts rising. It's all a bit headscratching but it has us ready for anything from the SNB. As we wrote yesterday, we're also preparing for the Article 50 trigger. On Monday, parliament voted to give May the final say on the deal with the EU, without seeking parliamentary approval. The vote now goes back to the House of Lords.

There was talk that the clause could be invoked late Tuesday but that's no longer likely. The Independent reports that Article 50 won't be triggered until at least next week, citing a spokesman for the Prime Minister. The pound was perky despite continued talk of a Scottish referendum.