Today, Swiss demand deposits have fallen from CHF 476.3 billion to CHF 470.3 billion, while the EUR / CHF is being pushed upwards and is now consolidating around CHF 1,1350 per euro. We began to see a slowdown in the growth of demand deposits. Foreign exchange reserves have increased sharply in July as the CHF weakened. We take into account that, for the moment, the SNB does not need to intervene as much as it intervened in the past.

The appreciation of the CHF is providing the Swiss central bank with some relief. However, we consider that the CHF remains significantly overvalued. The main engine remains the single currency and, in September, the ECB meeting will be key. There is room for disappointment as markets expect the European Central Bank to initiate a new adjustment by reducing the asset purchase program. On the contrary, we believe that the European institution will be more cautious and that there is a likelihood of downward pressures on the EUR / CHF pair.

On top of that, the Greek problem is not sustainable. Fitch upgraded CCC's debt rating to B- this weekend with a positive outlook. This contributes to boosting the euro in the short term, as markets will discount the possibility of a new rating. Recall that the burden of Greek debt is not sustainable in the long term and will send the money back to Switzerland. Any appreciation of the EUR / CHF should pave the way for a recharge of short euro positions.


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