The SNB foreign currency reserves came out this morning. They were significantly higher than the previous month (602.1bn vs 587.6bn CHF). This is the highest number ever for the SNB, which keeps increasing its reserves since early 2009 and dramatically accelerated since 2012. This shows what, intuitively, we thought: the SNB is still intervening massively to stabilize the EURCHF exchange rate, which is trapped in the 1.10-1.11 range since late April, and almost always above 1.09 since January. And this is not going to stop.
This morning the Swiss Consumer Price Index came out in line with the analysts’ expectations (0.1% vs 0.2% expected MoM and -0.4% vs -0.4% expected YoY). The figure is, in absolute value, very low and comparatively, it is located in the average of what we experienced since 2010. This does confirm what we explained with the Foreign Currency Reserves, which was the highest number ever for the SNB.
Swiss KOF leading indicator, designed to predict the Swiss economy over the next 6 months hit a new high reading at 102.9 since 1 year. The KOF continues to trend higher, which is a sign Swiss companies have started to adapt to the stronger franc.
UBS Q1 profits fell 64 percent with weak numbers in all segments: wealth management – 40%, investment bank – 67% and corporate finance – 39%. The only bright spot is an increase in net new money which follows 2 consecutive quarters of outflows.
Last night’s headline was the Australian CPI inflation falling – 0.2% quarterly (vs est. of+0.2%), which caused the AUD crosses to move against their bullish trend.
Switzerland published its March Trade Balance this morning and this one was catastrophic. The figure came out at CHF 2.16bn vs CHF 4.02bn previously. Switzerland did not publish such a low figure since February 2015, so more than a year.
Precious metals are again attracting a lot of attention with Gold and Silver futures long positioning reaching the highest level since 2013 according to CFTC data. Long-term investors are also starting to jump in, on fear of missing out according to UBS research. China started a yuan-denominated gold fix to compete with London Bullion fixing, yet the impact gold price remains to be evaluated.
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