The SNB doesn't have much option but to smooth out the Swiss franc's appreciation amid haven demand
Looking at the Swiss sight deposits data, I think it is safe to say that the SNB is seen somewhat intervening in markets once again. We haven't quite seen such level of increases - consistent ones for that matter - in sight deposits since 2017.
However, when you look at the EUR/CHF exchange rate, it's hard to really tell that the SNB has been present, if at all.
Price is sitting below the 1.09 level and there didn't seem to be much resistance stopping the pair from breaching below the 1.10 level recently as well.
As the global economic slowdown and trade tensions continue to deepen, it is inevitable that the franc will attract haven flows unless the SNB steps up its policy game.
However, given the lack of ammunition at hand, it is hard to see them being able to cap any franc strength over the longer-term.
Sure, they may pull off a surprise or two and give markets a bit of a shock but given the global backdrop above, it will be hard to imagine that having a lasting effect.
As such, much like how the PBOC is managing a controlled weakening in the yuan, the SNB has but little choice but to manage a controlled strengthening in the franc from hereon.
