EUR/CHF: What’s Going On With CHF? What’s The Trade? –

The euro is rising against the dollar but also against other peers. EUR/CHF is on the move and even getting close to the old floor line of 1.20.

Here is their view, courtesy of eFXnews:

Bank of America Merrill Lynch FX Strategy Research notes that  summer 2017 has so far been dominated by the  sharp  depreciation in the Swiss Franc.

“We would classify this as a “surprise” because  the scale of the move  over the past month has been unprecedented  since the SNB abandoned the EUR/CHF peg in January 2015  and  because it  appears to have  lacked an immediate  catalyst.  

….Now that the regional political risk premium has abated, CHF is  reverting  to its traditional role of a counter-cyclical funding currency,  which  in our view  should  make long EUR/CHF a cleaner trade on policy divergence and relative valuation.  However,the speed of the recent move  gives us  reason to expect consolidation ahead of 1.15 in EUR/CHF.

“Given we think the SNB will not deviate from its current strategy, this should limit any bounces in CHF and  our bias would therefore be as buyers of EUR/CHF on dips for the time being,” BofAML advises.

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