Swiss Franc: ECB support limits gains against euro – Rabobank

Rabobank's Senior FX Strategist Jane Foley discusses EUR/CHF performance since the Iran war, noting that the Swiss National Bank (SNB) has intervened to counter safe haven inflows while the European Central Bank’s (ECB) hawkish stance has supported the Euro (EUR). Foley expects EUR/CHF to consolidate around 0.92 over three months and sees range trading ahead as SNB intervention risks persist.

ECB hawkishness supports Euro-Swiss

"That said, the hawkishness of the ECB will have relieved some pressure on the EUR/CHF exchange rate and thus on the SNB. We expect further consolidation around the EUR/CHF 0.92 area on a 3-month view with potential for a slight upside bias reflecting ECB hawkishness."

"Since April, EUR/CHF has been trading a range only a touch below the average of the past year, supported by the more hawkish tone of the ECB."

"As expected, the ECB hiked rates last month and the market fully anticipates another move in the coming months. While higher rates from the ECB have helped remove downside pressure on the EUR/CHF currency pair, the SNB remains cautious."

"That said, economists see some risk of higher Swiss inflation in Q3, in part due to the move by EUR/CHF off its recent lows. This has triggered some talk in the market of the potential for the SNB to start normalising policy by raising rates possibly around the turn of the year."

"On balance, we expect range trading in both EUR/CHF and USD/CHF in the weeks ahead."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)