Swiss Franc: Risk of a hawkish SNB stance lends support – ING

Swiss inflation surprised at 1.5% year-on-year, prompting a fall in EUR/CHF and casting doubt on whether the Swiss National Bank can avoid tightening through 2027, according to ING’s Chris Turner. Recalling how the SNB used FX sales to strengthen the Swiss Franc in 2023, he anticipates greater interest in the currency over the coming months, posing downside risks to existing EUR/CHF forecasts.

Inflation puts SNB tightening back in focus

"EUR/CHF briefly traded sharply lower yesterday on the back of a surprisingly high October inflation print of 1.5% year-on-year. That raises questions about whether the Swiss National Bank can avoid tightening throughout the whole of 2027, which sources had claimed. We should hear a little more on this from SNB's Martin Schlegel tomorrow, who speaks at an SNB watchers conference."

"A more hawkish SNB is quite a clean positive for the Swiss franc. Traders will remember 2023, when the SNB actively drove the franc stronger and sold FX as part of its tightening toolkit. Expect to see even more interest in the Swiss franc over the coming months, with downside risks to EUR/CHF forecasts."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)