The Swiss National Bank (SNB) is set to avoid franc strengthening as the central bank is expected to intervene if the EUR/CHF pair accelerates towards the 1.05 level, economists at Société Générale report.
Euro weakness suggests SNB intervention risk
“EUR/CHF is now correlating with EUR/USD, which will be a very big headache for the SNB if the euro does crumble as Fed tightening draws closer.”
“Our forecasts suggest that the SNB’s FX reserves are going to grow again in the year ahead.”
“EUR/CHF is set to remain below 1.10, but the central bank is most likely to vigorously absorb any downside acceleration towards 1.05, limiting bouts of franc strength.”