CHF renewed its decline on weak inflation

Expert market comment made by senior analyst Alex Kuptsikevich of the FxPro Analyst Team: CHF renewed its decline on weak inflation
FxPro | 70 days ago

Weak Swiss inflation renewed the downward momentum of the franc, which is losing over 0.5% against the euro, sending EURCHF to highs last seen in May 2023.

The Swiss Consumer Price Index was virtually unchanged for March, with annual inflation slowing to just 1.0% - the lowest since September 2021. The Swiss National Bank has already unofficially celebrated a victory over inflation by unexpectedly cutting rates last month.

Fresh inflation data reinforces expectations of further policy easing. The franc has fallen for the past nine consecutive weeks, losing over 6% against the euro from extremes late last year. This is a significant move for a low-volatility pair like EURCHF, which has already returned to levels at the start of 2023. A further fall in the franc against the euro would work to inflate inflation, which is unlikely to please the SNB.

On balance, this means that the inertial upward movement in EURCHF could continue in the coming days or weeks, bringing the pair closer to parity. However, a subsequent depreciation of the franc against the euro or dollar has the potential to force the SNB to reconsider the soft approach. This is well within their power, as this CB is very active in forex and has room for policy tightening.

By the FxPro Analyst Team

Regulation: FCA (UK), CySEC (Cyprus), SCB (The Bahamas), FSCA (South Africa)
read more
Is the Glamour of CHF Fading Away? Bearish CHF!

Is the Glamour of CHF Fading Away? Bearish CHF!

The CHF's Mardi Gras celebrations are devoid of any late indulgence, as its February losses have deepened due to the unexpected downturn in the Swiss CPI data. Credit Agricole longstanding warning about the CHF's robust start to 2024, coupled with the SNB's altered stance on FX interventions in December, has manifested in the currency's struggles.
ACY Securities | 119 days ago
EUR & CHF – EUR Set to Go Further Down to 1.04

EUR & CHF – EUR Set to Go Further Down to 1.04

The EUR/USD pair has bounced back from its recent low of 1.0450, but it could struggle to find enough buyers as it approaches the 1.0530/1.0550 range. The US dollar remains an unattractive sell, and there is currently no compelling narrative in the eurozone to counter the exceptionalism story in the United States.
ACY Securities | 251 days ago
Dollar Drops on the Disinflation Trade – Keep Selling?

Dollar Drops on the Disinflation Trade – Keep Selling?

The downside surprise in US June CPI inflation has seen the dollar drop to new lows for the year. Over recent months I had been speculating that clear signs of US disinflation - and a weaker dollar - may emerge in 3Q23 and yesterday's moves could well be the start of an important market adjustment. 
ACY Securities | 335 days ago
Is it time to buy EURUSD?

Is it time to buy EURUSD?

Late cycle dollar strength meets the carry trade. I see two key themes driving FX markets in the near term. The first is central banks continuing to battle inflation, yield curves staying inverted, and the dollar continuing to hold gains. The second is cross-market volatility continuing to sink - generating greater interest in the carry trade. Expect these trends to hold into Fed, ECB and BoJ meet
ACY Securities | 370 days ago
USD & CHF: An Interesting Trade

USD & CHF: An Interesting Trade

Initially, the positive NFP gains gained attention, but this was quickly dampened by the first decline in household employment this year and a higher US unemployment rate, reaching a one-year high.
ACY Securities | 373 days ago
Possible Scenarios for End of This Month

Possible Scenarios for End of This Month

In April, the dollar underwent a slower correction compared to March. In response to persistent inflation, the Federal Reserve raised its key rates by 25 basis points to 5.00%-5.25% at the start of May.
ACY Securities | 394 days ago
Time to Take More Defensive Positioning

Time to Take More Defensive Positioning

FX volatility levels remain at the lower end of ranges as investors increasingly price a Fed pause this summer. But US debt ceiling fears are on the rise and US-China tension is showing no signs of easing.
ACY Securities | 416 days ago