EUR/CHF: Asymmetry In Reaction Functions After SNB; EUR/USD: Mraket To Test ECB – Danske

March 28, 2019 Off By admin-445

The Swiss franc is a safe-haven currency of sorts. Where can it go?
Here is their view, courtesy of eFXdata:

Dankse Research discusses its latest views on EUR/CHF and EUR/USD. Danske is neutral on EUR/CHF and bearish on EUR/USD in the near-term.

“The Swiss National Bank (SNB) kept all policy measures and signals unchanged yesterday as expected. The stance and another downward revision to inflation forecasts reflect a central bank that sees little relief in getting back to target. With the ECB sidelined, the SNB will have to remain patient for longer with little ability to shift into genuine ‘normalisation’ mode. EUR/CHF saw a delayed drop after the announcement and is a good example of the perceived asymmetry in reaction functions that haunt FX markets,” Danske notes.

What about the ECB? Near term, we think FX markets will test its willingness to shift into easing mode again. This hints at a higher EUR easing risk premium on a 3M horizon, which leaves downside risks to EUR/USD intact in our view,” Danske adds.

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