The Swiss franc depreciation against the euro in the pandemic aftermath has been primarily due to strong efforts by the Swiss National bank to water down upside pressures on the currency amid a rapid capital inflow. More recently, market bias towards pro-cyclical assets like the euro has helped ease the SNB’s burden, with the Swiss Franc gradually weakening as the global economy slowly starts its recovery. Against a generally weakening USD, however, the Swiss franc hasn’t been able to avoid appreciating in Q2. But with USDCHF a less relevant exchange rate for the domestic exports sector, and the US removing the “currency manipulator” label to the European country, the focus remains centred on the EURCHF rate. The moderate upward trend in this cross should continue to unfold for the remainder of the year, as global concerns over the medium-term horizon ease and markets embark upon a yield-seeking race, diverting attention away from CHF. However, a significant set of risks related to the evolution of the pandemic and global vaccination efforts threatens to push our bearish CHF outlook in the opposite direction.
You can read our CHF Outlook here:
Author: Olivia Alvarez Mendez