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EUR/CHF remains vigilant on ECB’s QE – Danske Bank

FXStreet (Edinburgh) - Christin Tuxen, Senior Analyst at Danske Bank, sees the cross could come under pressure in case of further ECB easing.

Key Quotes

EUR/CHF has settled in the 1.08-1.10 range following the post-Greece relief rally”.

“Notably, CHF has remained relatively untouched by its usual safe-haven status amid Chinese and Fed fears”.

“The weaker level of Swissie will be welcomed by an SNB that is (still) on track for a severe miss of its inflation target”.

“Indeed, the SNB needs all the help it can get from the currency as the central bank has largely run out of instruments: policy rates (at -0.75%) are already close to being de facto lower bound, and the SNB does not want its balance sheet to grow much further”.

“Markets are currently pricing in a gradual normalisation of SNB rates, which we think is fair. We have left our EUR/CHF forecasts unchanged, and while we do not look for aggressive ECB easing, an extension of QE could add some pressure on to EUR/CHF and the SNB too”.

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