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CHF: some warning signs

Analysts at UBS AG, Switzerland’s biggest bank, reduced forecasts for EUR/CHF. In their view, the pair will trade little changed at 1.22 in a month (the previous estimate was 1.25). The 3-month forecast is revised down from 1.27 to 1.24.

Last week the Swiss National Bank lowered its inflation forecasts and pledged to defend its franc cap of 1.20 per euro. UBS said that the SNB “was very conservative” which means that it views the situation “with a great deal of caution”. The specialists don’t see any big short-term moves in EUR/CHF.

According to the median estimate of more than 50 analysts in a Bloomberg News survey, EUR/CHF will trade at 1.23 at the end of June. That’s the strongest forecast for franc since the data was first collected in June 2013.

The International Monetary Fund recommended the SNB maintain its cap of 1.20 per euro and said the central bank may introduce negative rates on reserves of commercial banks if the franc strengthens further. 

Chart. Daily EUR/CHF

CHF
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