Synopsis:

Credit Agricole reports that the Swiss Franc, despite a recent softening, has held its ground as the G10's top currency this quarter. The trend suggests that while global risk sentiment heavily influences the CHF, it is increasingly independent of domestic interest rate shifts.

Key Points:

• CHF Performance: The Swiss Franc is noted as the best performer in the G10 FX space, maintaining its strength despite a slight weakening towards the end of October.

• Global vs. Domestic Impact: The currency's value has been more sensitive to the fluctuations in global risk appetite rather than to changes in Swiss economic policy or indicators.

• SNB Rate Hike Outlook: Swiss money markets are dialing back expectations for further rate hikes from the Swiss National Bank, diminishing the potential impact of domestic rate changes on the Franc.

• EUR/CHF Exchange Range: The pair is expected to remain within a 0.94 to 0.97 range, where the direction will largely be decided by the prevailing market sentiment rather than Swiss economic data.

Conclusion: Credit Agricole's assessment underscores the Swiss Franc's resilience as a top G10 FX performer, driven largely by its correlation with global risk sentiment. With Swiss rate hike expectations on the decline, the CHF appears insulated from domestic monetary policy shifts, suggesting that its near-term movements will be more closely tied to international market dynamics. As such, the EUR/CHF is likely to continue its recent consolidation, with broader market sentiment guiding its position within the established range.