He Swiss Franc (CHF) benefited significantly on Wednesday both against the United States Dollar (USD) as to Euro (EUR), point out Commerzbank FX analysts Ulrich Leuchtmann and Michael Pfister.
SNB prefers a weaker franc
“The move is somewhat surprising. In the past, it was always said that the CHF would strengthen when the USD strengthened. Yesterday it was the other way around. The only way I can explain this is that when the market is worried about the independence of the Federal Reserve (Fed), it prefers to look for other currencies that are perceived as safe havens and where fewer rate cuts are expected.”
“However, things are now getting interesting because the SNB and the Japanese Ministry of Finance are currently pursuing opposite intervention policies. Japan wants a stronger Yen, while in Switzerland the SNB prefers a weaker Franc. I would therefore be cautious about betting on excessive CHF strength.”
“The SNB is unlikely to intervene at levels just below 0.97 in EUR/CHF. But if it heads further towards 0.95? Then the risk of intervention certainly increases.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
