Peter A Rosenstreich
Swissquote Bank Ltd
EURCHF dropped sharply to 1.11197 low, breaking below key technical support levels. Trades will have to go back to 2017 to find new levels. With political risk premia rising in Europe, participants are rotating into the closest safe-haven trade. This week’s SNB meeting will include verbal interventions including the threat of currency purchases and deeper negative rates. However, the threshold for SNB physical interventions remains high. Weak CPI release today indicates that expectation for a shift toward tighter monetary policy is mistaken. USDCHF will further benefit from the “risk-off” environment is now seeing wider CHF strength key support is located .9953. Especially, considering expectations that a dovish Fed could prompt speculation of two rate cuts in 2019. CHF status as the regional safe haven play will continue to benefit CHF against G10 (exception JPY). The catalyst in our view for the sever CHF move was Trump visit to Britain which has fortified “hard” Brexit worries. Trump strong support for Nigel Farage will only charge the Brexit base, which is coming off a strong EU election win.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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