Germany Election: Significant downside potential in EUR/CHF on seismic shift towards the left – Credit Suisse

Germany is heading into a general election on Sunday, September 26. Strategists at Credit Suisse investigate the implications of different scenarios for their current bearish EUR/CHF view. Overall, they stick with their current EUR/CHF 1.0650 target.

See: EUR/CHF to dip towards 1.07 after failure at the 1.0941 downtrend – Commerzbank 

Bearish EUR/CHF view in all scenarios

“We only see modest upside for EUR/CHF if a SPD, Green and FDP government becomes a real possibility during the coalition talks. A positive outcome might be partly priced in already. We are more sceptical than many market observers about the prospect of a substantial push for more fiscal stimulus. Instead, we see only a modest fiscal impulse that might already be reflected in the price.”

“A coalition between the SPD, the Greens and the Left party could turn into a risk event. Such a scenario would reinforce our current bearish view on EUR/CHF. We would expect EUR/CHF to trade lower in the short-term and potentially even below our current target of 1.0650 in the medium-term.”