CHF: Downside opening up in coming 2 to 3 weeks - BAML

The Research Team at Bank of America Merrill Lynch (BAML) offers its near-term view on the   Swiss franc, in light of the recent US-China de-escalation.

"In negotiation theory, the zone of possible agreement (ZOPA) refers to a bargaining range outside of which no amount of negotiation will produce an agreement. For us, the key takeaway from the Trump-Xi meeting at the G20 is that Trump's decision to reverse the Huawei ban has brought the two sides back in the ZOPA. Skilled negotiators know that concessions at the right moment can alter perceptions and invoke desired responses. It looks to us that what may be a tactical concession could be calculated to foster the conditions for reaching a "historic" deal. Whether we will be proved right or not, the market will give the two sides the benefit of doubt for 2-3 week we think. During this waiting period, we believe the combination of de-escalation of a trade war and a healthy bounce in the June nonfarm payrolls will place some pressure on crowded positions in safe-haven assets. US rates and USD/CHF could see some retracement."