SNB President Jordan stated that ‘for quite a long time we had mainly a nominal appreciation – that was very helpful because it shielded us from the inflation pressure from abroad. However, in the last couple of weeks of last year, we saw real appreciation. That makes the situation for some of our firms more difficult’. 

The comments have encouraged speculation that the SNB could act to weaken the Franc if verbal intervention is not sufficient to reverse CHF strength. 

The comments from President Jordan will encourage speculation that the SNB could switch back to foreign purchases to help weaken the Franc if required, and/or start cutting rates ahead of the ECB.

At the same time, the reversal of Swiss Franc strength is being encouraged by the paring back of expectations for earlier rate cuts from the ECB and Fed.

Overall, the developments leave the Franc vulnerable to a further sell-off in the near-term as it continues to reverse strong gains from the end of last year.