**As seen in Risk In The Week report 03/17/24, subscribe at cablefxm.co.uk/reports
The SNB left policy unchanged in December, this week's docket holds the first quarterly meeting of the year and we're set to see any potential adjustment to the policy rate which stands at 1.75%. Two key points from December: there was a drop in the further rate hikes line in the policy statement and the central bank is no longer focusing on FX sales. The mix makes it comfortable for traders to drop bullish takes on the franc and even bet against it, however, the dollar has not recovered much of its 2023 lost ground vs the franc. It is also worth noting that the yen remains the YTD G10 bottom performer, the franc follows. The ranking is interesting as we're set to hear from both central banks this week, and the policy outlook is diverging widely between the SNB and some DM central banks.
SocGen strategists noted that the SNB has been working on ampler liquidity which removed a key bullish driver on the CHF, the desk pointed at Swiss banks' sight deposits picking up for the first time since 2020/2021. SocGen added that inflation has already hit below 2% for many months and that the CHF REER is hurting domestic industries. Economists at UBS had seen inflation prints increasing the likelihood of an SNB March rate cut, they headed into the February print looking for further hints and while the data saw an uptick, the pace remains below the central bank's target.
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