The SNB left its Libor target rate unchanged at 0.25%, as expected. The SNB also confirms that it will continue to take "firm action" to prevent an appreciation of the franc as the risk of deflation still remains a concern, according to the SNB's monetary policy assessment. The central bank also confirmed that it will "continue to provide the economy with a generous supply of liquidity". Nothing unexpected in the statement and with growth and inflation expected to remain low into next year we expect the policy to remain broadly unchanged until the end of this year at least.
EUR/CHF triggered stops to hit 1.5028 lows after SNB's Jordan said that the market should not become used to a certain level of intervention. Jordan said that the SNB has no fixed FX threshold and becomes active according to the situation at hand. Meanwhile, SNB Governor Roth said the SNB have achieved its aim with FX intervention, adding that the appreciation against the euro and the volatility have eased. The market may be inclined to test the 1.5000 level after these remarks and large stops below 1.5000 and 1.4980 could be vulnerable. However, we do not think that there will be an aggressive sell-off, with the SNB still expected to enter the market on any sharp CHF gain, which will deter heavy speculative positioning.
