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The SNB holds its policy meeting on Thursday. What can we expect from the meeting?

Here is their view, courtesy of eFXdata:

Bank of America Global Research discusses its expectations for this week’s SNB policy meeting on Thursday.

The SNB is likely to pursue the same strategy that it did over recent years:  discretionary FX interventions in an attempt to fend off abrupt and large FX appreciation that could further damage the export sector and domestic price dynamics…FX interventions are likely to remain the key policy tool,  although we reiterate that the central bank is probably no longer trying to achieve FX depreciation but allowing the smoothest and most gradual appreciation possible,” BofA notes.  

“The prospects for sustained CHF appreciation will ultimately hinge on whether there is a vol moment in markets.  The US Presidential Elections and Brexit are two such scenarios where we see acceleration in CHF strength beyond 0.90 in USD/CHF and 1.07 in EUR/CHF.  For the SNB, there should be no sense of imminent panic.  CHF has been behaving smartly so will likely continue to adopt its message warning that further interventions are necessary when needed. We continue to believe that SNB policy will be driven by FX considerations first rather than interest rates,  and  we  expect the policy rate to remain at -0.75% for the rest of the year,” BofA adds.  

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