Why is CHF not weaker? BoA Securities explains

September 03, 2024 11:11 PM AEST | By Investing

Google News:

Why is CHF not weaker? BoA Securities explains

Recent News

Canadians Pulling Together To Fight Avoidable Blindness

Sustainable and Circular Design: Repurposing Single-Use Plastics

Yum! Brands Publishes New Global Citizenship & Sustainability Repo...

Fifth Third Bank Empowers Louisville Community Through Its Neighborhoo...

Investing.com - Playing for Swiss franc weakness has by far the most consensus trade since the start of the year, according to Bank of America (NYSE:BAC) Securities, yet the currency has failed to weaken as much as expected.

At 08:25 ET (12:25 GMT), USD/CHF traded 0.1% higher at 0.8525, up 1.3% year to date, but down 0.6% over the course of the last month.

The reasons behind the expected Swiss franc weakness are solid, BOA explained, given Switzerland is a country with a historical tendency to deliver below target inflation. It has a central bank committed to prevent significant FX appreciation and a defensive domestic asset market, which all add to a country where FX weakness should be expected.

“However, to coin a popular analogy, this has very much been a year of two halves: significant FX weakness in H1 and a recovery in H2,” analysts at BOA Securities said, in a note dated Sept. 3.

“The causes of the turnaround in CHF are well known and well documented and are a salient reminder that CHF retains its risk-off hedging allure,” the bank added. “Geo-politics and regime shifts have constantly come to the rescue of CHF and so has been the case this year.”

Looking ahead, the U.S bank still sees the carry trade as likely to be a dominant factor weighing on CHF.

“In the near-term, trend favours some upside but we think we are entering the sell zone ahead of the SNB policy decision,” BOA said, with the Swiss National Bank set to make its next call on Sept. 26.

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.