Scope for the Franc to weaken somewhat against the EUR in the coming quarters – Commerzbank

FXStreet Insights Team FXStreet

The Franc continued to strengthen against the Euro in July. The unchanged hawkish stance of the SNB is likely to have helped. Economists at Commerzbank analyze CHF outlook.

SNB should increasingly tolerate a weaker Franc

As long as the SNB sees inflation risks, it is likely to favour a strong Franc and intervene in the foreign exchange market if necessary.

As we also assume that recession concerns for the Eurozone will weigh on the Euro, we have adjusted our EUR/CHF forecast slightly downwards, but maintain the view that the Franc should weaken moderately medium-term.

Price pressures and the risk of second-round effects should continue to ease in the coming months so that the SNB could tolerate a weakening of the Franc to some extent. And with the ECB likely to remain quite hawkish and, contrary to the market expectations unlikely to cut interest rates next year, the EUR should be supported from that side.

Source: Commerzbank Research

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