EUR/CHF will dip below 0.95 in Q4 on the back of safe-haven flow – Rabobank
|EUR/CHF spiked higher on today’s steady policy announcement from the SNB. Economists at Rabobank analyze the pair’s outlook.
CHF can be the subject of safe haven inflows when risks rise in the Eurozone
Today’s statement from the SNB makes it very clear why it surprised the market by keeping rates on hold this morning. While the central bank kept the door open for another rate hike, the outlook for growth and inflation in Switzerland suggests that the central bank has likely already done enough.
However, one obvious concern is the impact on the currency from an unexpected decision to leave rates unchanged in a month when the ECB opted to hike. To offset an inflationary drop in the value of the CHF vs. the EUR, the SNB included in the first paragraph of today’s statement the warning that it is ‘willing to be active in the foreign exchange market as necessary. In the current environment, the focus is on selling foreign currency’.
Going forward, we expect the worsened growth outlook in the Eurozone will allow EUR/CHF to dip back below the 0.95 level in Q4 on safe-haven flows.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.