-Manuel Oliveri, Credit Agricole FX Strategist
The Swiss National Bank's foreign currency reserves slightly increased last month, as official data showed. The SNB's forex reserves rose from 495 billion in December to 498 billion Swiss francs in January amid the central bank's decision to remove the cap for the Franc in mid-January. Since then, the Swiss currency kept strengthening against the Euro and the Greenback. The positive data on reserves most likely reflected the fall of the Euro and US Dollar, which dropped 14% and 11% versus the Franc, respectively. Due to SNB's intervention to maintain the cap, the largest part of the bank's reserves consists of the US Dollar and Euro, which are equal to approximately three quarters of Switzerland's GDP. High reserves were recorded for at least 1.5 years, as a large amount of Euros was acquired in order to restrain the Franc's gaining momentum against the common currency. However, the Swiss National Bank is still intervening, trying to prevent the Franc from rising after the cap removal. USD/CHF cross was last recorded trading at 0.9201.
Meanwhile, Switzerland's retail sales increased more than expected In January. According to the Federal Statistics Bureau, retail sales jumped from -0.6% in December to 2.2% in the last month. Swiss retail sales were expected to rise only 0.4%.
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