The divergence between gold prices and the Swiss franc/euro cross rate in the hours after the start of the invasion of Ukraine suggests to us that the SNB intervened to limit the sharp rise in the currency. But while the Bank might feel the need to push back against any further sharp spikes in the FX market, the broader level of the franc won’t be causing policymakers sleepless nights. Next week, GDP data from Switzerland and Sweden will show that output was about 2.0% and 3.5% above its pre-virus levels respectively in Q4 2021. Meanwhile, data released on Thursday are likely to show that Swiss inflation rose to a 160-month high in February, albeit only to +1.8%.
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