The initial optimism that followed the positive news about vaccines early last week brought a collective sigh of relief from the world’s population. The improvement in risk appetite led to a sharp upward adjustment in the value of the EUR / CHF, emphasize analysts at Rabobank. They estimate that the cross will appreciate in the coming months, but only moderately.
Key statements:
“Assuming the risk appetite remains in better shape, the implication is that the Swiss National Bank (SNB) may be able to take one foot off the pedal in its efforts to offset the CHF gains. That said, the war against the currency strength is far from being won. ”
“The bad news for the SNB is that in the current environment, the number of other G10 central banks fighting disinflation or deflation has increased. This could mean that the SNB’s effort to weaken its currency could be less effective. We see EUR / CHF in the 1.08 zone on a three-month perspective, rising only moderately to 1.09 next summer. ”
“While other central banks may continue to avoid foreign exchange intervention, in the context of excess capacity and downward pressure on inflation in the wake of the coronavirus crisis, many more have unleashed more expansionary monetary policies including QE. The ECB is expected to increase its asset purchases at the December policy meeting. Downward pressure on interest rate curves in the Eurozone could detract from the attractiveness of the EUR and limit the upside potential of the EUR / CHF“.
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