12 Jun 2015
EUR/CHF seen at 1.10 in 12-month view – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske Bank Christin Tuxen suggested the cross could edge higher to the 1.10 area in a year’s time.
Key Quotes
“The SNB is on track to undershoot its inflation target significantly unless CHF weakens from here”.
“However, the SNB has largely run out of instruments: policy rates (at -0.75%) are already probably close to a lower bound, and the central bank does not want its balance sheet to grow much further”.
“With general EUR weakness set to remain in the near term as the effects of ECB QE gain traction and Grexit risks linger, EUR/CHF could remain under pressure near term”.
“We look for the SNB to cut the sight deposit rate and the Libor target rate by 10bp to -0.85% in June, which should help limit CHF upside on a 3-6M horizon despite EUR weakness returning”.
“Further out, the SNB will in our view get some help from EUR weakness fading which – together with the outlook for Swiss rates to stay negative for a prolonged period of time – should foster a gradual uptick in the cross towards 1.10 in 12M”.
Key Quotes
“The SNB is on track to undershoot its inflation target significantly unless CHF weakens from here”.
“However, the SNB has largely run out of instruments: policy rates (at -0.75%) are already probably close to a lower bound, and the central bank does not want its balance sheet to grow much further”.
“With general EUR weakness set to remain in the near term as the effects of ECB QE gain traction and Grexit risks linger, EUR/CHF could remain under pressure near term”.
“We look for the SNB to cut the sight deposit rate and the Libor target rate by 10bp to -0.85% in June, which should help limit CHF upside on a 3-6M horizon despite EUR weakness returning”.
“Further out, the SNB will in our view get some help from EUR weakness fading which – together with the outlook for Swiss rates to stay negative for a prolonged period of time – should foster a gradual uptick in the cross towards 1.10 in 12M”.