Just a week after boosting their long bets on the Swiss franc, hedge fund have flipped to a bearish position on the currency amid speculation that the central bank is no longer supporting the currency with purchases and could be on the brink of lowering interests rates.
The report cites weekly positioning data from the CFTC showing that leveraged funds turned net sellers of the franc in the week ended 6 February, marking a sharp pivot from the prior week when the market was the longest it has been since November last year.
The repositioning came as the Swiss National Bank (SNB) released data suggesting that the central bank was also flipping to become a net seller of the franc, having said in December that it would no longer focus only on currency purchases.
The Swiss franc rose to its highest value against both the euro and the US dollar supported by the SNB’s programme of purchases, creating downward pressure on consumer prices. Inflation has now fallen below the bank’s 2% ceiling and policymakers last month called an end to their tightening cycle.