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Analyst Views on Most Recent CHF Strength

CHF
  • ING believe the SNB is a long way from resuming large scale FX sales to drive the Swiss franc stronger - as it did through 2022 and 2023. However, ING believe Jordan’s hawkish remarks suggest EURCHF could spend some more time in the 0.97-0.98 area.
  • Goldman Sachs added that while they do see Jordan’s comments as a reintroduction of a selling bias, they do not think the SNB is already intervening to strengthen the currency. While sight deposits have been declining gradually over the past few weeks, GS do not see this as evidence of current intervention – in any case sight deposits are not necessarily the most accurate intervention indicator. Currency strength in recent sessions has likely been driven more by carry moves than Jordan’s comments.
  • JPMorgan maintain their base case for a cut with lower conviction. They note positioning is still heavily short CHF, and so that leaves the SNB meeting as a threat to EUR/CHF if a cut isn’t delivered. Most FX-relevant will be inflation forecasts and governor Jordan’s comfort with currency depreciation in the press conference. Against global growth revisions the CHF NEER still screens rich, so even if the SNB don’t cut JPM still think there is a host of drivers (growth, net flows, rate spreads) that can weaken CHF over the medium term.
  • BofA concluded that whilst the risks are 2-way, their bias remains for further medium-term CHF weakness. However, BofA are cognisant that Jordan has perhaps altered the near-term narrative. Front-end vol is materially higher following his intervention and should May CPI surprise on the upside, then the risks of a further reset in rates and FX is likely.
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