EUR/CHF: Global risks underpin the franc, weakness not expected until Q2 2022 – MUFG

The Swiss franc was close to unchanged in September. In the view of economists at MUFG Bank, CHF can only weaken if global uncertainties diminish.

CHF is set to remain underpinned versus EUR

“The downside in EUR/CHF will continue to be constrained by SNB policy. But if stagflationary risks that are evident now were to escalate, there could well be increased demand for CHF that could test the resolve of the SNB. Our forecasts suggest the SNB will remain steadfast in limiting CHF gains.” 

“Might CHF be used as an inflation hedge during this stagflation uncertainty? Upside CHF risks are apparent. However, assuming supply-constraint problems and stagflation fears recede, we would expect CHF to weaken more notably from Q2 next year as global inflation fears subside.”