EUR/CHF to advance nicely on positive global developments – MUFG

During February the Swiss franc weakened against the euro from 1.0800 to 1.0983 as havens have been hit as optimism over global recovery builds. Economists at MUFG Bank expect CHF strength to gradually ease and forecast the EUR/CHF pair at 1.14 by year-end.

See: EUR/CHF to hover around the 1.09 mark by mid-year – CIBC

Key quotes

“The traditional safe haven and low-yielding G10 currencies have been the worst performers so far this year. The Swiss franc has been undermined by building optimism over the outlook for a stronger global recovery and rising expectations for higher inflation.”

“Global activity has held up better than feared to renewed restrictions over the winter, and the rollout of vaccines is boosting confidence that restrictions will be rolled back in the coming months. The slow vaccine rollout in Europe is a concern though.” 

“A further negative development for the Swiss franc this month has been the reduction in Italian political risk which has helped ease a downside tail risk for the eurozone economy and euro. PM Draghi is expected to focus on utilizing the European Recovery Funds effectively, and his appointment will encourage optimism over the potential for further beneficial eurozone reforms.”