CHF: SNB-ECB divergence to reinforce EUR/CHF upside - ING

In view of analysts at ING, the highlight this week will be Thursday's SNB meeting and they expect the SNB to fan the flames of divergence between itself and the ECB, allowing rate spreads to widen and EUR/CHF to strengthen.

Key Quotes

“The SNB still thinks the CHF is overvalued, whether it drops the adverb 'significantly' could be of interest.”

“The bottom line, however, is that ECB QE broke EUR/CHF and the SNB now expect ECB tapering to fix it. We agree with their position and see scope for a big rally over the coming quarters. At Thursday's meeting expect the SNB to focus on subdued growth, low inflation and weak trade. Macro theory would suggest a weaker CHF is required.”