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Jun 18 - 06:55 PM

Goldman Sachs: SNB June Meeting Focus on FX Language and Balance Sheet Policy

By eFXdata  —  Jun 18 - 03:00 PM

Synopsis:

Goldman Sachs anticipates that the Swiss National Bank (SNB) will maintain a close focus on FX language during its upcoming June meeting. While the rate decision remains uncertain, the balance sheet policy and broader European risk are expected to play a more significant role in influencing the Swiss Franc. Given recent comments by SNB President Thomas Jordan, there is potential for a reintroduction of a formal selling bias in FX language, emphasizing active foreign currency sales.

Key Points:

  1. FX Language:

    • The SNB's approach to FX language will be closely monitored.
    • There is a possibility of reintroducing a formal selling bias in FX language, focusing explicitly on selling foreign currency.
  2. Rate Decision:

    • The decision on interest rates remains a close call.
    • The balance sheet policy and broader European risks are considered more critical for the Franc's performance.
  3. Balance Sheet Policy:

    • The balance sheet policy is anticipated to be a key factor in supporting the Swiss Franc.
    • The prospect of only a limited cutting cycle is expected to influence SNB's policy decisions.
  4. Safe Haven Demand:

    • Renewed safe haven demand for the Swiss Franc is expected due to broader European risks.
    • The SNB's potential actions in the FX market could help bolster the Franc.
  5. Comments by President Jordan:

    • Recent remarks by SNB President Thomas Jordan suggest a potential shift in FX policy.
    • The explicit focus on selling foreign currency could be formally reintroduced in the FX language.

Conclusion:

Goldman Sachs expects the SNB to emphasize FX language and balance sheet policy during the June meeting. While the rate decision is uncertain, the reintroduction of a formal selling bias in FX language and a focus on selling foreign currency could support the Swiss Franc. The balance sheet policy and renewed safe haven demand due to broader European risks are likely to play a more significant role in shaping the SNB's approach.

Source:
Goldman Sachs Research/Market Commentary

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