A look at EUR/CHF from Bank of America
EUR/CHF jumped Monday in otherwise quiet trading and is up another 29 pips today to 1.0835.
Bank of America Global Research discusses CHF outlook and remains its bias for higher EUR/CHF into year-end.
"Our bias remains for higher EUR/CHF into year-end but we reiterate that any appreciation will be contained to the recent ranges as the policy divergence theme between the ECB and SNB is not compelling enough to trigger asset reallocation from Swiss assets and towards EZ assets. We are cognizant that the SNB will become increasingly uncomfortable should any CHF rallies be accompanied by concomitant rise in broader asset market volatility,"BofA notes.
"The evidence from weekly sight deposit data is so far tentatively suggesting that the SNB may have been actively intervening. This in itself should limit the downside but will not be the only condition for a recovery. A normalization in risk and renewed rises in real and nominal yields will arguably be more important," BofA adds.
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