MUFG Research discusses CHF outlook and sees a scope for further gains in the near-term.
"The best performing G10 currency so far this week has been the Swiss franc. It has benefitted alongside the other safe haven currencies of the yen and US dollar from the sharp US equity market sell-off overnight. The main trigger though for the reversal of recent Swiss franc weakness were the comments yesterday from SNB President Jordan who signalled that the SNB is ready to act if inflation pressures continue. It was the strongest signal yet from the SNB that they are starting to more seriously consider tightening monetary policy in response to upside risks to inflation," MUFG notes.
"The hawkish SNB comments contributed to the sharp reversal higher for the CHF. EUR/CHF has dropped back towards the 1.0300-level after failing again to break above the 200-day moving average at around 1.0490. He did still signal as well that the SNB remains ready to intervene to weaken the Swiss franc but must watch inflation elsewhere. Sight deposits at the SNB have risen notably since the Ukraine conflict started suggesting that intervention has been stepped up," MUFG ads.
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