Danske Research maintains a bullish bias on CHF over the medium-term.
"Swiss inflation is increasing and we expect inflation to reach around 3% by year-end. We expect the SNB to follow the ECB in raising interest rates the coming year to rein in inflation. SNB will lag the ECB in the coming hiking cycle as it meets less frequently, which has temporarily increased the discount on EUR/CHF in FX forwards," Danske notes.
"In terms of EUR/CHF spot, we continue to forecast the cross at 0.99 in 12M on the back of fundamentals and a move towards a global investment environment characterised by tighter economic policy and global liquidity conditions. With SNB following most central bank peers by hiking policy rates we expect a smaller forward discount to add support to CHF. Overall, our fundamental predisposition remains to buy CHF on a 3-6M horizon," Danske adds.