CIBC Research discusses EUR/CHF outlook and flags a scope for a move into 1.10 over the coming months.
"The upcoming ECB policy recalibration, code for more stimulus could risk putting more pressure on the SNB, especially were the ECB to surprise and look to take rates further into negative territory. However, as such an outcome remains a low probability scenario, we do not anticipate that the SNB will have to materially dial up the scale of intervention. This comes as recent weekly sight deposit data reveals a substantial moderation in activity compared to July/August," CIBC notes.
"The prospect of a more constructive macro outlook in 2021, predicated upon a vaccine supporting a macro recovery, points towards leveraged CHF long positions, from near six-year highs, being unwound. The position reversal will allow SNB activity to be progressively reduced, this comes as EURCHF should head back towards 1.10 for the first time since November 2019," CIBC adds.