Analysts at MUFG Bank, point out that hard landing fears and a hawkish Swiss National Bank (SNB) favour further Swiss franc outperformance. According to them, the Swissy should continue to benefit from the SNB’s desire to dampen upside inflation risks both through faster rate hikes and tolerating a stronger currency.
Key Quotes:
“The CHF has been the top performing G10 currency so far this month as it has strengthened sharply against both the EUR (+2.2%) and USD (+1.5%). It has regained upward momentum against our equally-weighted basket of other G10 currencies after a period of consolidation at higher levels between July and August. The CHF’s renewed upward has once again coincided with an abrupt hawkish repricing of SNB rate hike expectations similar to in June.”
“Market participants are increasingly confident that the SNB will continue to play catch up with major central banks and deliver a larger 100bps hike in the week ahead (Thurs) to combat upside inflation risks. There are currently 86bps of hikes priced in. The SNB has also become more tolerant of currency strength since their last policy meeting in June as it provides another channel to help dampen upside inflation risks.”
“The CHF appears well positioned to extend its recent advance especially against other high beta G10 currencies.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
