CHF: SNB inaction to re-accelerate safehaven flows - Nomura

Research Team at Nomura expects the SNB to stay on the sidelines next week, in terms of the policy rate setting but suggests that if the risk of SNB proactive rate cut is avoided, safehaven inflows into CHF should accelerate again.

Key Quotes

“Instead of a proactive rate cut, we expect the Bank to remain active in the FX market. However, if the risk of SNB proactive rate cut is avoided, inflows into CHF should accelerate again. Investors should focus more on the French situation once we pass next week’s FOMC too. During the two major risk events last year, the EUR/CHF depreciation trend became clearer around four to six weeks before the event, and CHF appreciated against EUR by around 2% in both cases. EUR/CHF could test 1.05 if political uncertainty remains high into the French presidential elections.”