SNB minutes offer little on negative rate debate – Rabobank

If the market had hoped that the publication of the minutes of the SNB’s latest policy meeting would lay bare the full array of the Governing Council’s thoughts on the pros and cons of negative rates, it will have been disappointed, Rabobank's FX analyst Jane Foley reports.

EUR/CHF edges higher amid intervention speculation

"As expected, the SNB left rates on hold at zero at its September 25th meeting, but speculation as to whether negative rates could be on the cards in the coming months has remained. Currently, market implied policy rates suggest only 7 bps of rate cuts on a 3-month view is likely."

"This cautious outlook is consistent with the lack of dovish content in the September minutes and with the comments from SNB President Schlegel yesterday that he expects inflation to pick up moderately in the next quarters. EUR/CHF is currently trading off its recent lows against a backdrop of market speculation as to whether the SNB has been intervening to soften the CHF."

"While CHF strength has been a thorn in the SNB side for years, the Swiss economy continues to function relatively well. This factor, plus the potential for safe haven demand to pick up on geopolitical concerns, suggests that the CHF is likely to remain well bid in the coming months. We have lowered our 1- and 3-month EUR/CHF forecasts to 0.93 from 0.94."