CHF still under pressure – Danske Bank

Christin Tuxen, Chief Analyst at Danske Bank, does not rule out further intervention by the SNB.

Key Quotes

“The SNB will likely be forced to keep using intervention to guard against CHF strength in a year that is set to see political uncertainty stay elevated in Europe”.

“The SNB has avoided being dragged into the spotlight by the Trump administration for currency manipulation although Switzerland meets all the criteria (has a trade surplus with the rest of the world - notably with the US - and intervenes one-sidedly in the FX market)”.

“We do not look for any marked changes to SNB policy in the near future with widespread support in the international community for the view that CHF is caught at overvalued levels”.

“As we do not think the ECB is rushing for the exit, it will take some time still for the long-standing undervaluation in EUR/CHF to be corrected. EUR/CHF should remain under pressure near term and we still see the cross at 1.08 in 3M, and are rolling our forecasts to now target 1.15 in 12M (prev. 1.14)”.

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