Bullish reversal for CHF after SNB sends hawkish political signal – MUFG
MUFG Research discusses the outlook for the CHF and sees a possibility for further near-term gains.
“The best performing G10 currency so far this week has been the Swiss Franc. next day. However, the main trigger for the reversal of recent Swiss Franc weakness was yesterday’s comments from SNB Chairman Jordan, who signaled that the SNB is ready to act if inflationary pressures continue. This is the strongest signal to date from the SNB that it is starting to look more seriously at tightening monetary policy in response to upside inflation risks.
“The hawkish comments from the SNB contributed to the sharp upturn in the CHF.
EUR/CHF fell back towards the 1.0300 level after again failing to break above the 200-day moving average around 1.0490. He nevertheless signaled that the SNB remains ready to intervene to weaken the Swiss franc but must monitor inflation elsewhere. Demand deposits at the SNB have increased significantly since the start of the conflict in Ukraine, suggesting that intervention has intensified.
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