CHF: Expecting only gradual weakness – Nomura

In view of the analysts at Nomura, Swiss current account remains robust which is likely to weaken the momentum of EUR/CHF appreciation in the medium-term.

Key Quotes

“CHF weakened after the French elections. EUR/CHF has headed higher by more than the OAT/Bund spread relationship would imply and that as well of typical swap rate spreads. So it seems CHF had more of an embedded risk aversion premium than even we expected over the French elections. For the rest of this year and the next the focus will be on the ECB normalisation trade that should be supportive of EUR crosses higher against CHF.”

“In the medium term, Swiss current account remains robust which likely weaken the momentum of EUR/CHF appreciation. Thus, we slightly lower our end-2018 EUR/CHF forecast to 1.12 from 1.15.”