This morning CPI data from Switzerland showed mild deflation starting to emerge as all metric came in showing negative price growth. The expectation of .2% YoY price growth was not met as the actual data came in showing - .1%. While one reading does not make a trend, this could be a sign of things to come.
This has the rumor flying that the SNB will step in to intervene further in the markets, with one claim going so far as to say that they would re-establish their price floor at 1.30 vs. Euro, up from the current 1.20.
From the chart below, you can see the weakening started to occur on Friday as Euro debt prospects of resolution improved, but accelerated on the CPI release. While I can’t see a further intervention coming this early, we may get a quick pop higher to 1.2425 at the R3 daily pivot resistance, before eventually falling back.
The only way we see intervention this early is if problems in the Euro zone cause the Swissie to strengthen on the risk aversion play. Otherwise, it is more cost effective for the SNB to let the events unfold and see if the markets will do the work for them