EUR/CHF stable around 1.08 - Natixis

Nordine Naam, Research Analyst at Natixis, notes that since the start of the month, the EUR/CHF has broken just below its unofficial 1.08 floor rate, setting a low at 1.075.

Key Quotes

“The Swiss franc’s appreciation has been spurred by the upturn in risk aversion, more specifically Donald Trump’s surge in the opinion polls, uncertainties over Brexit, and the upcoming Italian referendum at the start of December. Even though the Swiss National Bank continues to stress that the Swiss franc remains overvalued, the economy is on the mend as underlined by the latest KOF survey and PMI in October. Under pressure from the markets, the central bank appears less prone to intervene, especially since its foreign exchange reserves stand on high at CHF628bn.

Over the long term, interventions by the central bank in the foreign exchange market are not sustainable because of the risks they bring. In the short term, however, we expect the EUR/CHF to hold around 1.08 under pressure from the markets, which can be expected to remain strong, especially if the European Central Bank (ECB) announces a 6-month QE extension until September 2017.”