EUR/CHF targets 1.20 in 6-month – Danske Bank
|Chief Analyst at Danske Bank Christin Tuxen expects the cross to clinch de key 1.20 handle in the medium term.
Key Quotes
“CHF has gained during the recent reflation-driven risk sell-off but the franc had seen support from a more aggressive SNB. In our view, the market is currently ignoring that the road to exit for the SNB entails more steps than that of the ECB: fading SNB intervention is only a first step in the SNB’s 'normalisation' process; the next step will be to stop characterising CHF as ‘highly valued’. However, with the effective CHF appreciating recently, risking the recovery with exit talk is not a route we believe the SNB will want to go down. We think the SNB will remain on the sidelines on further steps towards ‘normalisation’ for now, which should allow EUR/CHF to edge firmly into the 1.20s this year”.
“We have kept our forecast profile intact, looking for 1.17 in 3M, 1.20 in 6M and 1.23 in 12M (all unchanged); we see 1.16 in 1M as risk sentiment remains fragile”.
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