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Nov 15 - 06:55 PM

CHF: EUR/CHF To Trade Around Parity For The Next Few Quarters - Barclays

By eFXdata  —  Nov 15 - 03:00 PM

Barclays Research discusses CHF outlook and targets EUR/CHF around 0.97, 0.97, 0.98, and 1.00 by end of Q1, Q2, Q3, and Q4 of next year respectively.

"We expect CHF to remain at the higher end of its historical range, with EURCHF trading around parity for the next few quarters. CHF remains an effective risk and inflation hedge in a slow growth/high inflation environment for European economies. In addition, large inflation differentials versus trading partners require offsetting nominal CHF appreciation. A faster China reopening, and an earlier-than-expected resolution of the Russian-Ukraine conflict pose downside risks to CHF strength," Barclays notes. 

"SNB communication has also shifted in a more dovish direction lately, even as the effects of a shallower hiking cycle on the franc may be offset at least partially by FX reserves selling. In H2 23, a more significant reduction in the euro’s risk premium is likely to see EURCHF climb back up to parity as European growth picks up again," Barclays adds. 

Source:
Barclays Research/Market Commentary

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