The persistent weakness of Swiss inflation, and the resulting trend appreciation in the nominal exchange rate, presents the SNB with a moving target when assessing when it will intervene during bouts of upward pressure on the franc. Having defended the CHF 1.05 per euro mark in earnest last year, we suspect that the SNB’s “line in the sand” may now be closer to CHF 1.025, and that it could live with the franc rising to parity with the euro over the coming years. Next week, we expect Swedish inflation data to show that the headline rate was unchanged at 2.8% in October. Meanwhile, the delayed release of GDP data from Norway (Friday) is likely to show that mainland output rose by about 2.5% q/q in Q3.
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