EUR/CHF: Deprecation pressure on the Franc is likely to be limited – Commerzbank
The Swiss National Bank surprised the market by refraining from raising interest rates further. As a result, the Franc depreciated. Economists at Commerzbank analyze CHF outlook.
Little appreciation potential for EUR/CHF
Contrary to what the majority of economists had expected, SNB did not hike its key rate but kept it on hold at 1.75%.
The SNB still sees considerable upside risks for inflation due to second-round effects which can in parts be observed already. Small changes to the framework conditions might mean that the SNB will have to raise its projections again (1.9% for 2025) and that inflation might rise back above price stability levels. For that reason, the SNB has kept the door open for further rate hikes and also confirmed its willingness to intervene in the FX market.
As this is a hawkish pause the deprecation pressure on the Franc is likely to be limited. In particular as more significant depreciation might cause the SNB to intervene again.
As EUR tends to be under depreciation pressure at present, now that the ECB has signalled the end of its rate hike cycle, we see little appreciation potential for EUR/CHF.
Reprinted from FXStreet_id，the copyright all reserved by the original author.
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
FOLLOWME Trading Community Website: https://www.followme.com
Hot
No comment on record. Start new comment.