"The risk of less favorable global economic developments has decreased somewhat compared to the last quarter. Nevertheless, structural problems in Europe persist, which could cause new tensions on the markets."
-Thomas Jordan, the Swiss National Bank President
When was the last time Franc reached the key level of 1.2 against the single currency? Right, one year ago. Since then the pair approached 1.2650, while during the last several weeks it has been hovering around 1.225- more than 200 pips above the benchmark level. Nevertheless, the Swiss National Bank does not cease to reiterate on its readiness to protect the domestic currency as it is overvalued and the cap is still vital. During the monthly meeting the SNB once again claimed their readiness to defend the cap by any means necessary for as long as it is needed. Meanwhile, in its quarterly bulletin Swiss authorities turned to other points as well. Hence, they mentioned the global recovery is still weak, however, it is likely to gain the momentum in the coming quarter, providing additional boost to the Alpine economy. However, the outlook for the emerging market has become somewhat more sombre. Regarding Swiss biggest trading partner- Europe, the SNB assumes it will be able to sustainably overcome the crisis, as economic indicators are pointing at gradual recovery. The central bank also published its projection for EUR/USD, saying the most popular currency pair will reach 1.33 in the second half. The last but not least, according to SNB's projections, the domestic economy should expand 1.5% this year and accelerate to 2.8% in 2014. Furthermore, consumer prices are also expected to pick up to 0.5% by the end of next year and climb to 1.0% in 2015, decreasing pressure on the government.
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