VIEW: Tuesday saw Natwest Markets........>

EURO-SWISS: VIEW: Tuesday saw Natwest Markets enter a long EUR/CHF trade at

CHF1.0630, with a target at CHF1.1000 and stop at CHF1.0400. They reason that

"rising political risk premium has weighed on the EUR in recent months. We

believe that the new (EU fiscal) proposal is sufficient to pressure EUR shorts,

most clearly in EUR/CHF. COVID-19 has been a severe test of Euro area political

cohesion and this will have encouraged some to seek protection from tail risk

events. The recent German Constitutional Court (GCC) ruling will have emboldened

EUR bears. The EUR is a simple and liquid hedge to owning European assets. It's

also an asset where you aren't going to run into the ECB buying. Anecdotally,

speculative investors are short EUR via spot and options. The continued rise in

SNB sight deposits also supports such a view given they are a proxy for SNB

intervention. So the announcement leans against a recent bearish narrative and

positioning. A sustained move higher for EUR/USD will probably require increased

confidence that the proposal is ultimately agreed. It may also need a shift in

relative growth, relative equity market performance and larger oil price gains.

However, the hurdle for EUR/CHF is lower as it's a simpler political risk play."