The Swiss Franc continues to strengthen against the Euro as the pair edges ever closer to the support set by the Swiss National Bank 3 years ago, a level it has defended several times in the past. The SNB have remained passive in recent weeks though as they sit tight ahead of the scheduled vote by the Swiss public on 30th November in the ‘Save Our Swiss Gold’ referendum.
It seems increasingly likely they will not be entering the market to intervene and buy up Euro’s before this date for fear of increased pressure on the currency pair as the referendum date nears, which would of course have the effect of nullifying their actions. It is widely expected that the vote will fall in the SNB’s favour however, a scenario that would no doubt see EURCHF jump under normal market conditions. On the flipside, should the referendum be successful, and the Swiss public prevail it could have far reaching effects on the SNB’s future authority, taking away their flexibility and limiting how it would be able to intervene in the future.
The currency pair is currently trading perilously close to the ‘floor’ at session lows of 1.2014 and a ‘yes’ vote later this month could see it go crashing through. Word on the street is that there are bid’s in the market at current levels and all the way down to 1.2000, some are calling them official, others are not. Either way, this situation is certainly interesting; we all wait with baited breathe as to the outcome of the vote and the future of Swiss economy on the 30th November.