Citi discusses USD/CHF outlook and flags the possibility of an intervention by the Swiss National Bank (SNB) to face the rapid drop of EUR/CHF.
"EM risk and associated risk off sentiment supported CHF. We are equally wary of the SNB reaction function. In Switzerland, both sentiment and survey based data are pointing to downside for activity data. What’s more the SNB will not be best pleased with the recent rapid depreciation in EUR/CHF. Thus, the possibility of SNB intervention is not ruled out.
We expect the SNB to move some time after the ECB normalizes its monetary policy," Citi argues.