Flash: As long as risk appetite holds, we expect the CHF to weaken further - Rabobank

FXstreet.com (Barcelona) - The EUR/CHF has been in a steady climb higher since the start of May, gaining just over 300 pips and currently at trading 1.2534

According to analysts at Rabobank, “since the SNB put its EUR/CHF1.20 peg in place in September 2011 we have maintained the view that the probability of the peg being moved higher to 1.25 was greater than the SNB allowing EUR/CHF to fall through its floor. This view has been particularly pertinent this month, since EUR/CHF has touched its highest levels since June 2011."

They went on to add, “As early as July last year it became possible to identify an increase in risk appetite among investors. This trend has been sustained this year. Generous provision of cheap liquidity from central banks has seen equity indices push higher and yields on sub-investment grade bonds and peripheral debt decline. On the assumption that risk appetite holds in the months ahead we expect the CHF to weaken further. We also re-iterate our view that if EUR/CHF manages to hold above 1.25 for a period of a few months, the SNB would likely raise the ‘floor’ to this level.