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:
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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.
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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.
-
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