EUR/CHF stable between 1.08 and 1.10 - Natixis

Nordine NAAM, Research Analyst at Natixis, explains that the Swiss franc corrected in the wake of Emmanuel Macron’s victory, as this caused the European political risk to subside and the EUR/CHF recovered back above 1.09.

Key Quotes

“This rebound is likely to be limited in that the euro will remain weak over the short to medium term, the ECB being in no hurry to raise interest rates given that inflation is holding on low. Furthermore, the Swiss franc continues to be bolstered by a current account surplus of almost 10% of GDP, which is not being offset by massive capital outflows. On the contrary, sight deposits at banks still tower on high by past standards.”

“Finally, global risks still lurk, notably because Italy is heading for general elections in February 2018. All in all, we remain cautious on the EUR/CHF, which could end up pulling back towards 1.08, even though in the short term the pair could test 1.11.”