SNB Preview: Two scenarios and their implications for EUR/CHF – Credit Suisse
|Tomorrow’s SNB meeting could be a decisive event for EUR/CHF. Economists at Credit Suisse envisage two scenarios.
Hawkish (60% odds)
Hiking by 50 bps would cement the SNB’s inflation-fighting credentials amid the recent trend of lower headline and core inflation rates. This hawkish scenario could be even more powerful were the SNB to signal further interest rate hikes in the future and should be Franc supportive.
Dovish (40% odds)
Hiking 50 bps but hinting at an end to the rate hiking cycle or ‘only’ raising rates by 25 bps combined with a dovish language should lead to a weaker Swiss Franc. The peak in the implied policy rate is near. Such a dovish scenario should lead to a softer CHF on a short- and medium-term basis.
The EUR/CHF target for end of this quarter is 0.96000
We stick with our current 0.9600 EUR/CHF target for the end of this quarter and would not rule out even lower levels in the medium term should our hawkish scenario unfold. Should the SNB decide not to live up to our hawkish expectations, we would not rule out a potential squeeze higher toward parity in EUR/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.