Germany heads to the general elections on Sunday, September 26. Credit Suisse strategists investigate the implications of different scenarios for their current bearish sentiment on EUR/CHF. Overall, they stick to their current EUR / CHF target of 1.0650.
Bearish view of EUR / CHF in all scenarios
“We only see a modest rise for the EUR / CHF if a government of the SPD, the Greens and the FDP becomes a real possibility during the coalition talks.. A positive result could already be partially discounted in the price. We are more skeptical than many other market watchers about the prospect of a substantial boost from more fiscal stimulus. Instead, we only see a modest fiscal boost that may already be reflected in the price. “
“A coalition between the SPD, the Greens and the left party could become a risk event. Such a scenario would reinforce our current bearish view on EUR / CHF. We hope that the EUR / CHF is moving lower in the short term and possibly even below our current target of 1.0650 in the medium term..”
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