Synopsis:

Credit Agricole is watching the SNB’s 2024 annual report for early indications of FX intervention activity in Q4 2024, ahead of Thursday’s SNB monetary policy decision. While FX purchases may have increased toward year-end as EUR/CHF stabilized lower, interventions remain far milder than in 2020-21, with interest rates remaining the SNB’s primary policy tool. Additionally, the recent EUR/CHF rebound should have reduced the need for further FX buying.

Key Points:

1️⃣ SNB Annual Report to Reveal 2024 FX Intervention Data 📊

• The report offers an early look at Q4 2024 FX intervention trends.
• FX purchases were CHF 0.7bn in Q3 2024 and may have increased toward year-end.

2️⃣ Late-2024 FX Purchases Likely Picked Up 📈

• EUR/CHF’s decline became more sustained in Q4, which could have prompted more intervention.
• However, FX buying was much milder than in 2020-21, reflecting the SNB’s current preference for rate policy over FX interventions.

3️⃣ Less Need for FX Buying as EUR/CHF Rebounds 🔄

• The recent EUR/CHF recovery has likely reduced intervention prospects.
• USD/CHF is still off its Q3 2024 lows, further limiting the urgency for SNB action.

Conclusion:

Credit Agricole sees potential signs of increased SNB FX interventions in late 2024, but on a much smaller scale than in past years. With EUR/CHF rebounding, the need for further FX purchases may now be diminishing, keeping the focus on Thursday’s SNB policy decision.