SNB currency reserves data shows an increase in May
The SNB currency reserves under the IMF standard rose to CHF 441.4b in May from a revised CHF436.1b in April. Consensus was for reserves of CHF440.5b, a slight currency-adjusted decline. The release of the Swiss FX reserves is important in that many has speculated that the SNB would start selling reserves back to the markets above 1.25 on EURCHF. We strongly believe such action is unlikely as it would largely define EURCHF to a range and would potentially bring a redefense of 1.20 onto the cards again. Since reserves have increased in May, this confirms our view of no unwinding. We think long EURCHF position liquidation is likely temporary and think that the CHF should eventually come back under pressure. We target 1.28.
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BNP Paribas