Short EUR/CHF – Deutsche Bank

Shuaib Chowdhary, Macro Strategist at Deutsche Bank, recommends to go short on EUR/CHF cross in their G10 Trade Idea of the Week.

Key Quotes

“Target 1.00, entry 1.07, stop 1.09” 

“Firstly, the Swiss private sector is not recycling Swiss current account surpluses. Recent Q4 data showed that Swiss investors sold more foreign direct and portfolio assets than they bought. A continuation of this trend is likely to put further pressure on the SNB’s ability to defend its implicit EUR/CHF floor.”

“Secondly, our IMM positioning data suggests that investor CHF positioning is still short.”  

“Finally, our FEER valuation models as well as robust export performance suggest that the franc is no longer overvalued on a fundamental basis.”