The Swiss National Bank shocked marketwatchers on Sept 6, 2011 when officials introduced a EUR/CHF floor of 1.20. The announcement sent the pair up more than 1000 pips.
The SNB never put a timeline on the actions, only saying it was to prevent deflation. If Europe successfully navigates 2014 without a flare up in the crisis, the SNB will come under increasing pressure to remove the cap and no matter how they do it, volatility will result. Another option would be Switzerland adopting the euro but I don’t believe the Swiss public is interested, especially if they’re allowed to keep all the benefits of the euro (via the peg) without any of the downside of potentially funding bankrupt neighbors.
My guess is that we get an announcement right around Sept 6, 2014 — three years to the day since the peg was introduced.
