We expect the CHF to remain a sell on rallies, in particular versus commodity currencies such as the CAD.
This is due to stable risk sentiment and as there is room for the SNB to turn more dovish in the months to come.
As part of this week’s monetary policy announcement, the central bank downgraded its growth and inflation forecasts and stressed that the risk of deflation increased again.
As such it was clearly communicated that all options regarding additional policy measures will be kept open for the time being.
This is especially true as the ECB’s more aggressive monetary policy stance is keeping EUR/CHF subject to downside risk and the generally overvalued CHF is keeping monetary conditions overly tight.
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