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17 Apr 2015
SNB to cut rates further, EUR/CHF at 1.10 in 12-m – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske Bank Christin Tuxen sees the SNB lowering further its deposits rate and the cross heading towards 1.10 in 12-month view.
Key Quotes
“The SNB is on track to significantly undershoot its inflation target unless CHF weakens from here”.
“However, the SNB has largely run out of instruments: policy rates (at -0.75%) are already firmly in negative territory and the central bank does not want its balance sheet to grow much further”.
“With general EUR weakness set to remain in the near term as the effects of ECB QE gains traction and Grexit risks linger, EUR/CHF could remain under pressure near term”.
“We look for the SNB to cut the sight deposit rate and the Libor target rate by 10bp to -0.85% in June which should help limit CHF upside on a 3-6M horizon”.
“Further out, the SNB will in our view get some (much needed) help from EUR weakness fading which – together with the outlook for Swiss rates to stay negative for a prolonged period of time – we expect to foster a gradual uptick in the cross towards 1.10 in 12M”.
Key Quotes
“The SNB is on track to significantly undershoot its inflation target unless CHF weakens from here”.
“However, the SNB has largely run out of instruments: policy rates (at -0.75%) are already firmly in negative territory and the central bank does not want its balance sheet to grow much further”.
“With general EUR weakness set to remain in the near term as the effects of ECB QE gains traction and Grexit risks linger, EUR/CHF could remain under pressure near term”.
“We look for the SNB to cut the sight deposit rate and the Libor target rate by 10bp to -0.85% in June which should help limit CHF upside on a 3-6M horizon”.
“Further out, the SNB will in our view get some (much needed) help from EUR weakness fading which – together with the outlook for Swiss rates to stay negative for a prolonged period of time – we expect to foster a gradual uptick in the cross towards 1.10 in 12M”.