EUR/CHF could reach 1.13 in a year’s view – Danske Bank

Jens Pedersen, Senior Analyst at Danske Bank, has noted the SNB remains well active in the FX markets, while sees EUR/CHF around 1.13 in a 12-m view.

Key Quotes

“The Swiss National Bank (SNB) has continued to intervene substantially in the FX market post the Brexit vote in order to curb CHF appreciation pressure. The SNB’s currency reserve rose to a record high in July at CHF615.4bn. As the ECB has moved its finger from the ratecut button, the pressure on CHF from relative rates has eased. We expect the SNB to keep both the Libor target midpoint and the sight-deposit rate at -0.75% for the near future. We expect the SNB to continue using intervention as a first line of defence should the franc appreciate further”.

“EUR/CHF has been trading in the 1.08-1.09 range over the summer as the SNB has capped CHF appreciation via FX interventions. We expect the SNB to remain active in the FX market and expect EUR/CHF to remain range bound in the coming months targeting the cross at 1.09 in 1M and 3M (revised higher from 1.07). Longer term, we