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Jane Foley, senior FX strategist at Rabobank, points out that that the CHF is the second worst performing G10 currency in the year to date, after the SEK.  

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“Since the CHF has a strong safe haven draw it seems rational that it will perform poorly when levels of risk appetite are high.   The question for investors is whether risk appetite can sustain given the backdrop of slowing world growth and whether safe havens will perform, better later in the year.”

“When the SNB holds its next meeting on March 21, there is little chance that it will alter its current policy path. Its ultra-accommodative policy settings, which include a threat to intervene in the FX market if necessary, are in part aimed at chasing away speculative inflows which for years have intermittently underpinned the value of the CHF and contributed to extremely low domestic price pressures.”

“Almost irrespective of SNB policy, the CHF is still at risk of pushing higher should risk appetite fall due to its safe haven status. Over the past two years CHF/JPY has traded sideways indicating no real preference from investors of one of these safe havens vs. the other.   While the sheer strength of equity indices today suggests little prospect of a rush into either safe haven in the immediate term, there is a risk should economic data or geopolitical risk deteriorate.”

“Going forward, however, we see the risk of a US recession in 2020 and the continuation of trade tensions in some form.   Against this backdrop we see a strong risk that risk appetite will worsen in the months ahead.   As a consequence we expect the CHF to end the year on a firmer note, though in light of the supportive policies of central banks we expect to move lower in EUR/CHF to be moderate.   We see risk of a move towards EUR/CHF1.10 on a 12 mth view and expect strong psychological support in the 1.12 area.”