FXstreet.com (Barcelona) - In a metaphoric way, Sebastien Galy, FX strategist at Societe Generale, says that book options as burning as EUR/CHF “explodes higher.” “The great portfolio outflows are yet to materialize boosting EUR/CHF,” the analyst adds, suggesting: “We target an overshoot above 1.30 as investors put on strategic shorts in CHF.”
“The Swiss Franc should overshoot into the 1.30-1.35 region as investors start using the CHF as a funding currency and safe haven flows are squeeze out. Banks for example hold over 100bn in CHF deposits. For now, the move higher in EUR/CHF is driven by the risk management of existing option structures and a repositioning of hedge funds. The Swiss Franc remains very expensive across multiple metrics and lags the reality of a far more stable Europe,” he concludes.
“The Swiss Franc should overshoot into the 1.30-1.35 region as investors start using the CHF as a funding currency and safe haven flows are squeeze out. Banks for example hold over 100bn in CHF deposits. For now, the move higher in EUR/CHF is driven by the risk management of existing option structures and a repositioning of hedge funds. The Swiss Franc remains very expensive across multiple metrics and lags the reality of a far more stable Europe,” he concludes.
