The overnight drop in the value of the JPY briefly left the CHF as the best-performing G10 currency over the past five sessions this morning. In our view, this is not an accolade that the SNB has welcomed, notes Jane Foley, senior FX strategist at Rabobank.
EUR/CHF will return to the 0.95 area
“We expect the more stable market conditions over the past 36 hours or so to allow the CHF to continue to weaken as some safe-haven flows reverse. These factors suggest that the CHF is likely to continue to find good support from safe-haven flows in the coming months. For much of the first half of this year, the CHF was in a weakening trend against the EUR.”
“The weaker CHF will have been good news for Swiss exporters. Since the end of May, the value of EUR/CHF has more or less reversed all of the upward move in the first 5 months of the year. EUR/CHF trended higher in late June, but one could argue that the overall impact of the SNB rate cut in June was limited by the ECB policy announcement in the same month.”
“As markets stabilise following the market turmoil earlier this week, we expect EUR/CHF to return to the 0.95 area. However, despite the likelihood of another SNB rate cut in September, we expect safe-haven demand to prevent EUR/CHF from trending higher over the medium term. We have adjusted our EUR/CHF forecasts and expect a trading band to centre around the 0.95 to 0.96 area over the next 12 months.
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.
