7 May 2015
Potential for long USD/CHF – BAML
FXStreet (Edinburgh) - Myria Kyriacou, Analyst at BAML, suggested that USD/CHF could inch higher in the medium term.
Key Quotes
“We maintain our forecasts unchanged, targeting 1.10 by the end of the year, but with increased risks around our view, given recent price action”.
“The negative deposit rate appears to have had some effect already, and if even some money flows out of Switzerland that will gradually weaken CHF”.
“It remains to be seen whether the recent pause in CHF weakening is temporary”.
“We expect the SNB will stay vigilant and act as needed to counter sustained CHF strength, with action becoming more likely if EUR/CHF moves back towards parity, and with FX intervention the most likely ‘first choice’ of tool”.
“Recent communication however suggests that the SNB may be more tolerant of CHF strength, at least for a time, as they allow the situation to normalize without the EUR/CHF floor in place”.
“We continue to see greater potential in long USD/CHF, as policy divergence between the Fed and the SNB widens further”.
Key Quotes
“We maintain our forecasts unchanged, targeting 1.10 by the end of the year, but with increased risks around our view, given recent price action”.
“The negative deposit rate appears to have had some effect already, and if even some money flows out of Switzerland that will gradually weaken CHF”.
“It remains to be seen whether the recent pause in CHF weakening is temporary”.
“We expect the SNB will stay vigilant and act as needed to counter sustained CHF strength, with action becoming more likely if EUR/CHF moves back towards parity, and with FX intervention the most likely ‘first choice’ of tool”.
“Recent communication however suggests that the SNB may be more tolerant of CHF strength, at least for a time, as they allow the situation to normalize without the EUR/CHF floor in place”.
“We continue to see greater potential in long USD/CHF, as policy divergence between the Fed and the SNB widens further”.