EUR/CHF set to march forward throughout the year – MUFG
|The Swiss National Bank (SNB) had its quarterly monetary policy meeting on Thursday and there was no surprise in the monetary policy stance being left unchanged. Economists at MUFG Bank expect the EUR/CHF pair to move higher based on the global reflation assumption.
Key quotes
“There is hardly any reason for any considerable shift in policy stance and the only notable change was the SNB committed to intervening to limit CHF strength “as necessary’ in contrast to the commitment last year post-COVID to intervene ‘more strongly’ in order to achieve its price stability goal.
“While Switzerland now meets the US Treasury criteria for being a “currency manipulator” we doubt it will shape SNB behaviour much and we doubt it will change US behaviour much either. The Swiss correctly point out that the QE policy undertaken by large countries like the US is not available to the SNB and therefore have to utilise foreign asset purchases to expand its balance sheet.”
“External factors will continue to dictate CHF movement and direction and we maintain that and based on our global reflation assumption, we continue to see scope for EUR/CHF moving further higher this year.”
“USD/CHF is currently higher than we expected given EUR/USD is far lower. Assuming EUR/USD corrects higher again later this year, then EUR/CHF will be the avenue of CHF depreciation not USD/CHF.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.