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Jun 24 - 09:55 AM

Credit Agricole: Short CHF Attractive Against JPY and USD Post-SNB Meeting

By eFXdata  —  Jun 24 - 09:32 AM

Synopsis:

Following the June SNB policy meeting, Credit Agricole sees potential in shorting CHF against other safe-haven currencies like JPY and USD. The outlook considers ongoing European political developments, particularly in France, as a significant factor influencing EUR/CHF.

Key Points:

  1. CHF Weakening Post-SNB Meeting:

    • The Swiss Franc (CHF) weakened following the recent SNB policy meeting.
    • The market is assessing whether this weakness will persist, especially against the EUR.
  2. Influence of French Political Drama:

    • Political uncertainties in France are expected to be a key driver of EUR/CHF movements rather than relative SNB monetary policies.
    • The SNB's best hope might be to stabilize or put a floor under EUR/CHF amidst these political developments.
  3. Attractiveness of CHF Shorts:

    • CHF shorts remain attractive against other safe-haven currencies such as the Japanese Yen (JPY) and the US Dollar (USD).
    • This strategy is particularly relevant in light of the SNB meeting's outcomes and the broader market context.
  4. Focus on European Political Developments:

    • With a lighter Swiss economic data calendar next week, European political events will play a more critical role in driving CHF movements.
    • Investors should pay close attention to these political developments as they could significantly impact the CHF.

Conclusion:

Credit Agricole suggests that shorting CHF against JPY and USD could be a viable strategy following the June SNB meeting. While the CHF has weakened, the persistence of these losses will largely depend on European political developments, particularly in France. As the Swiss data calendar lightens, the focus will shift more towards these political events, which could continue to drive CHF dynamics in the near term.

Source:
Crédit Agricole Research/Market Commentary

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