Synopsis:

BNP Paribas expects the Swiss franc (CHF) to underperform the euro (EUR) moderately but maintain strength against the US dollar (USD) due to global capital reallocation, subdued SNB resistance, and resilient safe-haven flows.

Key Points:

• Forecasts:

  • EUR/CHF projected at 0.96 by end-2025 (moderate CHF weakness).

  • USD/CHF revised lower to 0.80 by end-2025 (stronger CHF vs USD).

• Bullish EUR View:
  EUR expected to outperform CHF on the back of:

  1. Stronger Eurozone growth tied to recent fiscal expansion.

  2. A passive SNB unlikely to intervene against modest CHF weakness.

• Reasons to Remain Cautious on CHF Bearishness:

  1. Global growth expectations have weakened, keeping safe-haven demand alive.

  2. Swiss repatriation flows from large USD asset holdings (excluding SNB) could support the CHF as global investors rotate out of US markets.

  3. SNB easing may have limited FX impact as flows override rate differentials; but risks of CHF-selling intervention could rise as policy approaches the zero lower bound.

Conclusion:

While BNPP anticipates moderate CHF depreciation versus the EUR, they expect the franc to remain firm against the USD. This is driven less by rate policy and more by capital flows and relative macro conditions—especially in a world recalibrating exposure away from US assets.