|

EUR/CHF to shift only moderately higher next year – Rabobank

The initial optimism that followed the positive vaccine news at the start of last week brought a collective sigh of relief from the global population. The improvement in risk appetite led to a sharp upward adjustment in the value of the EUR/CHF. Additionally, the Swiss Nationa Bank (SNB) maintains a policy of FX intervention. All in all, Jane Foley Senior FX Strategist at Rabobank, expects the EUR/CHF pair to post a slight appreciation in the coming months.

Key quotes

“Assuming risk appetite remains in a better footing the implication is that the SNB may be able to take its foot off the pedal somewhat in its efforts to offset gains in the value of the CHF. That said, the war on currency strength is far from won. 

“The bad news for the SNB is that in the current environment the number of other G10 central banks fighting disinflation or deflation have increased. This could mean that the SNB’s effort to weaken its currency could be less effective. We see EUR/CHF at the 1.08 area on a 3-month view rising only moderately to 1.09 next summer.”

“While other central banks may continue to steer away from FX intervention, against the backdrop of excess capacity and downward pressure on inflation in the wake of the covid crisis many more have unleashed easier monetary policies which includes QE. The ECB is widely expected to increase its asset purchases in its December policy meeting. The downward pressure on interest rate curves across the eurozone could detract from the attraction of the EUR and limit upside potential for EUR/CHF.”  

Author

More from FXStreet Team
Share:

Editor's Picks

EUR/USD struggles near 1.1850, with all eyes on US CPI data

EUR/USD holds losses while keeping its range near 1.1850 in European trading on Friday. A broadly cautious market environment paired with a steady US Dollar undermines the pair ahead of the critical US CPI data. Meanwhile, the Eurozone Q4 GDP second estimate has little to no impact on the Euro. 

GBP/USD recovers above 1.3600, awaits US CPI for fresh impetus

GBP/USD recovers some ground above 1.3600 in the European session on Friday, though it lacks bullish conviction. The US Dollar remains supported amid a softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday. 

Gold remains below $5,000 as US inflation report looms

Gold retreats from the vicinity of the $5,000 psychological mark, though sticks to its modest intraday gains in the European session. Traders now look forward to the release of the US consumer inflation figures for more cues about the Fed policy path. The outlook will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.

US CPI data set to show modest inflation cooling as markets price in a more hawkish Fed

The US Bureau of Labor Statistics will publish January’s Consumer Price Index data on Friday, delayed by the brief and partial United States government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s 2% target.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Solana Price Forecast: Mixed market sentiment caps recovery

Solana (SOL) is trading at $79 as of Friday, following a correction of over 9% so far this week. On-chain and derivatives data indicates mixed sentiment among traders, further limiting the chances of a price recovery.