Maybe, just maybe, the Swiss franc is about to stop tormenting its central bank.
At any available opportunity, the Swiss National Bank bemoans the strength of its currency, which famously rocketed after its upper limit was removed in dramatic fashion at the start of 2015.
Now, finally, the currency appears to be sliding all by itself, without the central bank snapping up euros to bash it down.
Having broken lower yesterday, the franc is again sliding today, with the euro up by some 0.75 per cent against the franc at SFr1.1230.
One reason for all this is the persistent strength of the euro, which has of course shot higher against the wobbling dollar. In addition, the broad market mood remains doggedly cheerful, denting support for the safe-retreat franc.
Commerzbank is clearly being forced into a change of heart. Esther Reichelt at the bank writes:
We have warned since the abolition of the exchange-rate floor that the franc had not yet fully corrected from the pent-up strength it had acquired while the euro floor was in place. And we were concerned that this strength might materialize quite suddenly once the franc came under appreciation pressure, as the abolition of the exchange rate floor in January 2015 showed that the SNB is not ready for unlimited interventions.
Still, we must admit that appreciation risks for the franc are decreasing. And that reduces the likelihood that the limits of the SNB’s willingness to intervene are tested again.
For more on cheerful markets, check out our Facebook Live video with the FT’s John Authers.