Credit Agricole discusses CHF outlook and maintains a bearish bias expressing that via holding a long EUR/CHF position* targeting a move towards 1.1950.
"In the coming two weeks it will be quiet in terms of top-tier data, with the exception of the KOF leading indicator in two weeks’ time. We see a low risk of the release implying an improving growth outlook. Hence, incoming data should keep SNB monetary-policy expectations capped. Just this week, the central bank lowered growth and inflation projections, suggesting that the SNB is likely to keep rates low for longer. In the grand scheme of things it will be left to diverging central-bank rate expectations, as driven by the ECB and/or weaker CHF-related capital flows, to drive crosses such as EUR/CHF higher," CACIB argues.
"This remains our base case for the coming year, and portfolio flows, in particular, may be an important source of strength in the first quarter of 2019. We stay long EUR/CHF as a trade recommendation," CACIB adds.
*Recorded in eFXplus Orders