The market turbulence of a few weeks ago led to a strong demand for safety, which naturally benefited the Swiss franc (CHF). In EUR/CHF terms, we narrowly missed an all-time low. The situation has since calmed down somewhat. We expect moderate CHF weakness in the coming months as the SNB is likely to cut interest rates further. However, this is unlikely to go too far, i.e. to parity, Commerzbank’s FX Analyst Michael Pfister notes.
EUR/CHF to weaken only slightly
“Concerns about the global economy came to a sudden peak a few weeks ago when the US labour market disappointed. As a result, investors moved out of riskier assets and safe-haven assets - including the CHF - benefited significantly. However, this was only the tip of a trend that had begun several weeks earlier. In mid-July, the EUR/CHF was still trading at just under 0.98, and only two weeks later it was close to its all-time low of just under 0.93.”
“The CHF is likely to suffer from such an outcome. We therefore continue to expect slightly higher EUR/CHF levels in the coming months. This may not look like a very pronounced move at first glance. However, it is important to bear in mind that the increased global demand for safe-haven assets is unlikely to disappear completely due to the current uncertainties.”
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
Hot
No comment on record. Start new comment.