Swiss Franc: Weakens against Euro on softer Swiss rates – ING

ING’s Chris Turner notes EUR/CHF has drifted back to 0.92 as Swiss rates lag global moves and markets price three European Central Bank (ECB) hikes over the next 10–12 months. He highlights ongoing Swiss National Bank (SNB) intervention willingness and expects EUR/CHF to stay supported near 0.92, with a possible move to 0.93 if the ECB delivers a hawkish surprise.

SNB stance and ECB risks support pair

"Despite uncertainty in the Gulf, EUR/CHF has crept back up to the 0.92 area. Driving this move, we believe, is the sell-off in the interest rate market, where Swiss market interest rates lag any global trends. Our team sees the risk of a hawkish ECB meeting this Thursday, which means that the pricing of three rate hikes over the next 10-12 months can stick."

"In the background, the Swiss National Bank continues its position of an increased willingness to intervene in FX markets. First quarter FX intervention data will be released on 30 June and will likely show a decent pick-up after a very quiet couple of years for the SNB in this space."

"The above should keep EUR/CHF supported near 0.92 and the surprise package would be a move to 0.93 on a hawkish ECB story."