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Aug 22 - 02:55 PM

Dnakse on EUR/CHF Dynamics and Outlook

By eFXdata  —  Aug 22 - 01:30 PM

Danske Bank presents its viewpoint on the EUR/CHF currency pair and the potential movement based on economic indicators and the stance of the Swiss National Bank (SNB). Here's a summary:

1. Recent Movement:

  • EUR/CHF Dynamics: Recently, the Swiss Franc (CHF) strengthened, resulting in the EUR/CHF dipping decisively below 0.96.

2. Swiss Economic Data:

  • Manufacturing PMI: A notable decrease to 38.5 in July from 44.9 in June.
  • Labour Market: Initial signs of frailty, as unemployment crept up to a seasonally adjusted 2.1% in July.
  • Inflation Data:
    • Core Inflation: Accelerated in July with seasonally adjusted month-on-month measures at 0.10%, up from 0.03% in the prior month.
    • Headline Inflation: Recorded 1.3% m/m SA, a rise from -0.02% m/m.
  • Wage Growth: The KOF economic research center anticipates average salary increments of 2% over the upcoming 12 months.

3. Swiss National Bank's Stance:

  • Rate Hike: Danske Bank anticipates the SNB to increase the policy rate by 25 basis points during the September meeting, taking it to 2%. However, this increase is perceived as a calibration rather than a fundamental shift.

4. Forecast for EUR/CHF:

  • Outlook: Danske Bank persists in its prediction of a continuous downward trajectory for EUR/CHF. They identify potential risks on the downside to their 6-12 month forecast of 0.95.

In Conclusion: Danske Bank's perspective signals caution on the EUR/CHF pair, considering recent economic indicators from Switzerland and the upcoming policy decisions of the SNB. The bank foresees a potential further decline in EUR/CHF, possibly below their medium-term forecast.

Danske Research/Market Commentary


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