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Jan 29 - 12:55 PM

Nomura: Structural Short CHF/JPY Attarctive

By eFXdata  —  Jan 29 - 11:30 AM

Synopsis:

Nomura maintains a structural short CHF/JPY position due to clear monetary policy divergence, expecting the Swiss National Bank (SNB) to curb CHF strength through FX intervention if necessary.

Key Points:

  1. CHF Weakness Driven by SNB Policy Stance:

    • The SNB remains highly accommodative, with inflation near zero.
    • CHF strength would exacerbate deflationary pressures, prompting potential FX intervention.
    • SNB President Schlegel has reiterated that negative rates could return if needed.
  2. JPY Support from BoJ Policy Shift:

    • The Bank of Japan is gradually shifting toward tighter monetary policy, contrasting with SNB’s dovish stance.
    • Rising Japanese yields and potential rate hikes support JPY strength against CHF.
  3. Risk-Off Considerations:

    • CHF may see temporary safe-haven demand in a risk-off scenario.
    • However, Nomura expects SNB intervention to limit excessive CHF appreciation.

Conclusion:

Nomura continues to favor a structural short CHF/JPY position, expecting SNB policy actions and intervention to limit CHF gains, while BoJ’s tightening bias supports JPY strength.

Source:
Nomura Research/Market Commentary

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