As a consequence of the recent geopolitical developments, analysts at Rabobank anticipate that, on any escalation of geopolitical concerns, JPY/CHF could move moderately higher, as has been the case since the start of the year.
Key quotes
“In the last few year, geopolitical events have failed to have a lasting impact on markets. Similarly, last year’s persistent fears about slowing world growth failed to put a brake on stock market gains.”
“Since the GFC years, the generous provision of liquidity from central banks has subdued the impact of bad news on asset prices and reduced market volatility. “
“However, assuming that neither country wants war and since the tensions do raise the chances of further central banks easing this year, the rallies in safe haven assets could be limited.”