EUR/CHF seen at 1.21 in the medium term – Danske Bank

Chief Analyst at Danske bank Christin Tuxen expects the Swiss Franc to depreciate to the 1.2100 area vs. the single currency in a 6-month horizon.

Key Quotes

“CHF has continued to weaken in recent weeks despite the escalation in e.g. the Russia/Syrian conflict. Special factors may have kept the cross bid lately but risks are tilted in favour of a near-term setback as risk sentiment is under pressure from trade war, geopolitical risks and a cyclical downturn alike. In our view the money market still ignores that the road to exit for the SNB entails more steps than that of the ECB: fading SNB intervention is only a first step in the SNB’s 'normalisation' process; the next step will be for the SNB to stop characterising CHF as ‘highly valued’. We thus think the SNB will remain side lined, which should allow EUR/CHF to edge firmly into the 1.20s this year amid a continued ECB ‘normalisation’ process”.

“We still look for the cross to trade at 1.18 in 1M, 1.19 in 3M, 1.21 in 6M and 1.23 in 12M (all unchanged)”.