EUR/CHF: SNB Intervention to keep a lid on CHF valuations ahead – CIBC
21.12.2021, 17:26

EUR/CHF: SNB Intervention to keep a lid on CHF valuations ahead – CIBC

Intervention in the currency market from the Swiss National Bank will likely keep a lid on the Swiss franc valuation ahead, according to analysts at CIBC. They forecast EUR/CHF at 1.05 by the end of the first quarter and at 1.07 by the second quarter of next year. 

Key Quotes: 

“The last two months have witnessed a substantive grind lower in EUR/CHF. Across that period, we have seen the CHF gain more than 4%. The broad-based CHF gain, against an increasingly beleaguered EUR, has seen the cross trade below 1.04 for the first time since mid-2015. Gains in the CHF came despite the fact that leveraged players moved substantially short of the CHF into early November.”

“Should the SNB encounter similar inflationary tendencies as that expected by the ECB, namely longrun price pressures are expected to be contained, not least as second-round wage effects remain limited, this underlines the scope for renewed intervention activity, to preclude a return of disinflationary tendencies.”

“The arrival of the omicron variant provides a new variable to throw into the CHF mix; this comes as the currency remains a primary risk-off beneficiary. Omicron risks notwithstanding, SNB inertia, in line with the ECB, allied to an acceleration in intervention, points towards potential underperformance against ongoing USD impetus into 2022.”

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