All Talk, No Action From SNB!
Earlier this morning, the markets were left somewhat disappointed in the lack of action taken by the Swiss National Bank (SNB) with regard to how they are going to manage their currency. Recent statements about a possible peg to the Euro or the setting of a target rate for the franc went unfulfilled as the franc has bounced off of the lows just above parity with the Euro.
This illustrates how a Central bank can influence its currency through the threat (or promise) of certain action, though the market may attempt to test that Ceentral bank’s resolve. What the Swiss did say though is that they would be adding liquidity to the market, which esentially means that they will be active and could embark on a series of “mini-interventions” if they are not happy with the value of the franc (CHF).
So the Swissie strengthened immediately on the non-action, though it has weakened a bit as the market has started the morning in risk-taking mode with less demand for safe havens. So the franc appears to be trading in a range between its S1 pivot support and R1 pivot resistance.