19 Jan 2015
EUR/CHF looks to the ECB – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske Bank Lars Christensen argued that the following next steps by the European Central Bank could prove to be crucial for the cross.
Key Quotes
“The SNB’s surprise removal of the 1.20 EUR/CHF floor has brought volatility back to global FX markets and this is likely to persist for a while, as CHF markets learn about the SNB’s new reaction function”.
“The CHF will now be subject to much less predictable SNB policy moves and we cannot rule out that the SNB will have to do more (rate cuts and/or intervention) to match an upcoming ECB QE move”.
“Indeed, the SNB will have a hard time justifying continued CHF strength, as deflation remains an entrenched issue for the Swiss economy”.
“We stress, however, that the ECB policy will be crucial for EUR/CHF in the near term”.
Key Quotes
“The SNB’s surprise removal of the 1.20 EUR/CHF floor has brought volatility back to global FX markets and this is likely to persist for a while, as CHF markets learn about the SNB’s new reaction function”.
“The CHF will now be subject to much less predictable SNB policy moves and we cannot rule out that the SNB will have to do more (rate cuts and/or intervention) to match an upcoming ECB QE move”.
“Indeed, the SNB will have a hard time justifying continued CHF strength, as deflation remains an entrenched issue for the Swiss economy”.
“We stress, however, that the ECB policy will be crucial for EUR/CHF in the near term”.