The Swiss franc
hit a two-week low against the euro and the dollar on Monday, on talk
that the Swiss National Bank was intervening to weaken the currency and
on a report that it was targeting a new informal band.
A Swiss newspaper,
Schweiz am Sonntag, reported on Sunday that the SNB is unofficially
targeting an exchange rate of 1.05-1.10 francs per euro, citing sources
close to the bank. A spokesman for the central bank declined to comment
on the story.
On Jan. 15, the SNB shocked markets by removing a cap of 1.20 francs per euro, a move that saw the Swiss franc initially surge more than 40 percent. It has since given up some of those gains and now trades about 13 percent higher against the euro compared to just before the cap was removed.
Data
released on Monday showed that bank deposits with the SNB rose in the
week ending Jan. 30, fuelling speculation that the central bank has been
active.
The euro was up 1.9 percent on the day against the Swiss franc at 1.05800 francs while the dollar was higher by a similar margin at 0.9345 francs.
"It is chatter that there is an informal band and the sight deposits data suggests that the SNB is there in the market," said Manuel Oliveri FX strategist at Credit Agricole.
"The
SNB is trying to smoothe the flows and the volatility. Also we are
seeing that our clients are staying away from this currency because of
the all the volatility that we have seen."
Citi said in a note that the report of an informal target for the euro/Swiss franc is likely to "reinforce the perception invisible hands have encouraged the Swiss franc lower."
Against the dollar, the euro was 0.35 percent higher, trading at $1.13155, taking some comfort from its gains against the Swiss franc and purchasing managers' surveys showing manufacturing growth in Ireland, Spain and the Netherlands.
"Now that U.S. GDP growth has come lower than expected, markets are paying more attention to other U.S. data, to be released in the coming days," said Kengo Suzuki, chief forex strategist at Mizuho Securities.
Among key numbers, U.S. ISM non-manufacturing data will be out on Monday and the latest non-farm payrolls report is due on Friday.
On Jan. 15, the SNB shocked markets by removing a cap of 1.20 francs per euro, a move that saw the Swiss franc initially surge more than 40 percent. It has since given up some of those gains and now trades about 13 percent higher against the euro compared to just before the cap was removed.
The euro was up 1.9 percent on the day against the Swiss franc at 1.05800 francs while the dollar was higher by a similar margin at 0.9345 francs.
"It is chatter that there is an informal band and the sight deposits data suggests that the SNB is there in the market," said Manuel Oliveri FX strategist at Credit Agricole.
Citi said in a note that the report of an informal target for the euro/Swiss franc is likely to "reinforce the perception invisible hands have encouraged the Swiss franc lower."
Against the dollar, the euro was 0.35 percent higher, trading at $1.13155, taking some comfort from its gains against the Swiss franc and purchasing managers' surveys showing manufacturing growth in Ireland, Spain and the Netherlands.
"Now that U.S. GDP growth has come lower than expected, markets are paying more attention to other U.S. data, to be released in the coming days," said Kengo Suzuki, chief forex strategist at Mizuho Securities.
Among key numbers, U.S. ISM non-manufacturing data will be out on Monday and the latest non-farm payrolls report is due on Friday.
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