Market worries about the B.1.1.529 virus variant have exacerbated upward pressure on the safe-haven Swiss franc and will test the SNB’s tolerance of a stronger currency. In our view, the Bank seems to be focused on managing rather than preventing the appreciation against the euro and we suspect that it will eschew large-scale interventions unless the franc reaches the CHF 1.025 per euro mark. Next week, we expect Swedish national accounts data to show that GDP rose by 1.8% q/q in Q3, while Swiss inflation data are likely to show that the headline rate edged down to 1.1% in November.
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