EUR/CHF is set to move towards 0.96 on a 1-to-3-month view – Rabobank
16.07.2024, 14:20

EUR/CHF is set to move towards 0.96 on a 1-to-3-month view – Rabobank

Safe haven demand for the The Swiss Franc (CHF) to pick up if the Eurozone were to run into a rough patch. Risk of jitters around French politics and its budget we see risk of dips in EUR/CHF towards 0.96 on a 1-to-3-month view, Rabobank’s Senior FX Strategist Jane Foley notes.

French political jitters may send EUR/CHF to 0.96

“In view of Switzerland’s history of deflation and disinflation, it can be assumed that the SNB tends not to welcome CHF strength. Despite this year’s modest weakening in the value of the CHF, EUR/CHF has been in a downtrend since 2007. Safe haven demand for the CHF, triggered by the GFC, picked up in 2010 and 2011 in reflection of the Eurozone debt crisis.”

“In September 2011, the SNB set a minimum exchange rate at EUR/CHF1.20, though this was suddenly abandoned in January 2015. After the initial volatility settled down, a period of relative stability followed before EUR/CHF re-embarked on its downtrend in 2018. As a rough rule of thumb, we would expect safe haven demand for the CHF to pick up if the Eurozone were to run into a rough patch.”

“While relief followed France’s news last weekend, it will remain difficult for the country to repair its budget position. Italy’s budget issues may also come into sharper focus this year. In our view this underpins risk of an easier policy bias into 2025. In view of the risk of jitters around French politics and its budget we see risk of dips in EUR/CHF towards 0.96 on a 1-to-3-month view.”

 

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