From the FXWW Chatroom: The strengthening of the Swiss franc last week is at odds with fundamentals and could present an attractive opportunity to engage in long EUR/CHF positions.Rather unusually, the move took place in spite of buoyant global risk sentiment and continued normalisation in European periphery spreads, including Italy. In addition, there was little sign of the market repricing SNB rate hike expectations in a way that should result in currency strength; if anything it is the repricing of ECB rate hike expectations that should have led to more CHF weakness particularly vs EUR. Lastly, trends in sight deposits continue to point to further normalisation in demand for cash and safe-haven outflows.Overall, last week’s move in EUR/CHF could be down to idiosyncratic short-term flows and positioning that should soon reverse rather than a harbinger of a change of direction. We remain bullish EUR/CHF (end-18 target: 1.22) and think that further franc weakness is a pre-condition for SNB normalisation. (UBS)
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