In response to the ECB’s unexpected hawkish shift and the subsequent adjustment in bond market pricing, we have revised up our near-term EURCHF projections from February’s submission. Over a longer timeframe, given expectations of a stronger regional and global economic backdrop, we expect the Swiss Franc has room to depreciate against the majority of the G10. The recent hawkish repricing for the ECB and the following spike in EURCHF means our forecasts are now flatter compared to earlier projections as further CHF weakness is likely to be counteracted by SNB policy measures in order to limit the inflation pass-through. Risks to our new forecasts are largely balanced; further action by the ECB in the near-term may be offset by the central bank providing a pathway for the SNB to follow suit out of negative interest rates, while a material escalation in Russia-Ukraine tensions is as likely as a de-escalation in our subjective view.
Read Monex’s February 2022 CHF Outlook here:
Author: Ima Sammani, FX Market Analyst