USD/CHF: Major central banks to keep loose policy favoring Swiss franc vs dollar – MUFG

Analysts at MUFG Bank, maintaining a short USD/CHF trade idea, reflecting their expectations that the US dollar is likely to weaken further following the US election result. The idea has a target at 0.8650 and a stop-loss at 0.9250. 

Key Quotes:

“USD/CHF tested and held key support at the 0.9000-level for now. However, we continue believe that the election victory for Joe Biden supports our outlook for further USD weakness. We still expect the Fed to step up monetary easing to support the economic recovery especially now that Congress is likely to remain divided.”

“The CHF has been one of the main beneficiaries of the currency debasement trade alongside the price of gold. Similarly, the ECB are set to announce a further significant expansion (EUR500bn plus) of their own QE programme in December which boosts the relative appeal of the CHF against the EUR as well. We are not convinced yet that the global growth outlook warrants a tightening of monetary policy given the unprecedented shock from COVID-19, and a sustained reversal of CHF strength.”