Where art thou SNB?
The pair falls to a low of 1.0864, its weakest level since 26 June 2017. That sees the franc overtaking the yen as the best performing major currency today as risk-off flows continue to dominate the start of the trading week.
Of note, we’re seeing bond yields tumble heavily as equities are staying battered on the session and that is keeping currencies in a more risk averse and defensive mood.
As for the swissie, it begs the question of how much more franc strength can the SNB tolerate ahead of its 19 September meeting?
Sight deposits data suggest that there are small hints that the central bank is doing something but to smooth out the appreciation in the currency, they’re going to have to do a whole lot more and soon; or risk things getting out of hand.
As such, be mindful that they may not necessarily wait until 19 September to announce any necessary actions (a rate cut perhaps?) like the incident we experienced in January 2015.