Barclays on the Swiss franc, they are expecting the Swiss National Bank to intervene, and more

This is from eFX

Developments since the summer have led Swiss data to improve somewhat, while deeply negative nominal Swiss interest rates are fuelling modest CHF depreciation from levels of extreme overvaluation, notes Barclays Capital.

"CHF depreciation, albeit at a slower-than-expected pace, has taken the REER back to its pre-summer levels, when it faced strong inflows to 'Grexit' risks, thus alleviating some of the pressure from the SNB.

Recent SNB inactivity is likely to be challenged in the coming quarters, as we expect the ECB to cut its deposit rate in December, putting significant downward pressure on EURCHF. We expect an immediate response from the SNB, in the form of aggressive FX intervention and removing all exemptions of domestic banks on sight deposits, in our view," Barclays projects.

"Our estimates show that an increasing share of sight deposits at the SNB has been exposed to negative rates, and as the non-exempt share of their assets has grown, banks will extend negative rates to their clients.

Our expectation for the SNB to use its nuclear option has increased following the introduction of negative rates for small individual current accounts, charging -0.125% on amounts up to CHF100K and -0.75% on amounts above CHF100K by a small Swiss bank, Swiss Alternative Bank Schweiz (ABS). The move highlights the pressure SNB policies are imposing on smaller banks, putting them at a disadvantage relative to their larger, multinational competitors and possibly exposing them to deposit flight if the larger banks do not follow suit," Barclays argues.

"We expect a broad-based shift to negative rates on retail deposits to lead to substantial CHF selling, raising jump risks for EURCHF. We forecast EURCHF to appreciate to 1.14 by yearend before resuming its steady uptrend towards 1.18 by Q4 16. Yet option prices continue to understate this event risk, assigning less than a 3% chance to a 2 standard deviation move over the next three months," Barclays projects.