By eFXdata — Oct 03 - 11:00 AM
Synopsis:
HSBC highlights that the USD remains the primary safe haven, especially in light of recent developments concerning the CHF and JPY.
Key Points:
- The Swiss National Bank (SNB) has shown that its tolerance for CHF strength is limited, as underscored by comments from the new SNB president. Recent Swiss inflation data fell below consensus at 0.8% YoY in September (expected 1.0%), which is likely to increase the SNB's discomfort with a rising CHF in safe-haven flows.
- In Japan, new Prime Minister comments indicated hesitance towards further rate hikes, stating the environment isn't ready for additional increases. BoJ board member Asahi Noguchi emphasized the need for a pause after a single hike to assess its impact, while Governor Ueda advocated for a cautious approach regarding future rate decisions.
- Given this less hawkish stance from Japanese policymakers, the appeal of the JPY as a safe haven is diminished.
Conclusion:
Amid escalating geopolitical risks and the impending US elections, the USD is positioned as the preferred safe haven, overshadowing the traditional roles of the CHF and JPY.
Source:
HSBC Research/Market Commentary