CIBC discusses EUR/CHF outlook and expects a small decline towards 1.12 in Q1 of 2019, while noticing that USD/CHF tends to top out around the 1.00 level.
"The SNB has little reason to intervene these days. Consider that EURCHF is trading above the year-to-date low and USDCHF is flirting with parity. Additionally, the recent risk-off move has not led to a traditional rally in the CHF. Despite the improved domestic picture, forward-looking indicators have cooled as of late.
In addition, with inflation still under 1%, there is no sign that the economy is overheating. This is part of the reason why the market has the SNB a long ways away from hiking, with the first hike not fully priced in until late 2019 (according to the Euro Swiss futures curves and assuming a 10bps initial move)," CIBC notes.
"In that respect, there is room for surprise and especially if ECB hikes are moved forward (the SNB has a history of shadowing ECB policy). Despite the rhetoric, we see the current appetite for intervention as low. The SNB’s balance sheet is already close to the nominal size of the economy while global trends favour tighter policies in the quarters ahead. USDCHF tends to top out at parity and so speculative bets on downside make some sense going forward," CIBC argues.