The Swiss franc moved higher against the US dollar and euro after the UBS Swiss consumption indicator rose to the highest level in a year, driven by an increase in new car registrations. The indicator printed a reading of 1.41 for April, compared to the previous month’s 1.20 level, showing an expanding Swiss economy despite the faltering euro zone.
This could further push investors to resort to the Swiss franc as a safe haven currency versus the euro, which adds concerns to the Swiss National Bank. Only just recently SNB President Thomas Jordan said that a government-led panel is considering controls on capital inflows as a way of curbing further franc strength against the euro. These measures would follow from the SNB intervention on September 6 last year when a floor was set to keep EURCHF from dipping below 1.200 exchange rate.
If the SNB introduces these capital controls, they would be like a negative interest rate on deposits, and would imply that the SNB is worried about their continued ability to maintain the 1.200 floor.
EURCHF traded a low of 1.2013 after the data, hovering close to the SNB exchange rate cap of 1.2000 francs.