In their weekly strategy report, analysts at CitiBank explained why they forecast USD/CHF around 1.00 in a 0-3M period and at 0.98 over 6-12M. They long term forecast is 0.92.
Key Quotes:
“As the Fed may not hike rates this year and fiscal boost may fade gradually, USD may lose momentum. We expect EA growth recovering relative to the US with slower US activity the bigger driver. This is also medium-term USD negative. Our point forecasts show the $ around 1% weaker vs. G10 over 0-3m and around 3-4% weaker over 6-12m.”
“As the global manufacturing slowdown caught up with Switzerland, economic indicators have continued to cool sharply. We expect Swiss growth and inflation outlook to further deteriorate. Further rate cuts by the SNB may be needed and the SNB may even expand its balance sheet if necessary. Should Italy fears re-escalate, we think the SNB will remain “active in the FX market as necessary.”
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