(Bloomberg) -- The franc is trading near a two-week low versus the euro on Swiss data weakness, with both positioning and charts signaling more short-term pain. Yet, losses may be limited as the currency’s haven appeal should eventually prevail amid the deepening global economic gloom.
The franc has pared its year-to-date advance to about 3% on expectations the Swiss National Bank may need to ease monetary policy amid slowing inflation and a manufacturing slump. It had run into resistance even before the recent poor data when it traded at levels stronger than 1.09 per euro, which are historically associated with increased currency intervention by the SNB.
Scheduled events over the coming week offer limited scope to unsettle ongoing currency trends and while trade and Brexit headlines may stir up some volatility, market reactions are unlikely to extend beyond the knee-jerk.
The franc’s weakening potential looks limited even on any SNB move to add stimulus, as the institution would only be joining peers such as the European Central Bank and Federal Reserve in leaning more dovish.
While Swiss policy makers are scheduled to meet next on Dec. 12, officials would actually break a longstanding habit if they acted then. The SNB’s trademark style has been to deliver surprises between meetings -- such as when it scrapped the franc’s 1.20 per euro cap in 2015.
Technically, the euro has scope to strengthen due to a bullish crossover of short-term moving averages. This developed Thursday when traders noted a very large buying clip in dollar-franc, which was seen as a one-off transaction. History suggests that such a pattern, when it occurs within a firm downtrend, results in a relief rebound without triggering a big change in market sentiment.