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19 May 2014
CHF might see further downside pressure – J.P.Morgan Private Bank
FXStreet (Edinburgh) - Sara Yates, Global Head of FX Strategy at J,P.Morgan Private Bank, sees the CHF to weaken further in the upcoming periods.
Key Quotes
“The currency we expect to move down by more than the EUR is the CHF.”
“For now, the EUR and CHF are largely moving together against the USD. This is because the 1.20 floor in EURCHF prevents the EUR from falling much quicker than the CHF. As EURUSD falls towards our 1y target, we believe European assets will look more attractive to foreign buyers. We think this increased inflow will help EURUSD stabilise around 1.33.”
“However, we think this same inflow will help the EUR move higher against the CHF. This suggests that while EURUSD moves sideways around 1.33, USDCHF could continue to appreciate. As such, we see a great potential return from being long the USD versus the CHF than the EUR.
Key Quotes
“The currency we expect to move down by more than the EUR is the CHF.”
“For now, the EUR and CHF are largely moving together against the USD. This is because the 1.20 floor in EURCHF prevents the EUR from falling much quicker than the CHF. As EURUSD falls towards our 1y target, we believe European assets will look more attractive to foreign buyers. We think this increased inflow will help EURUSD stabilise around 1.33.”
“However, we think this same inflow will help the EUR move higher against the CHF. This suggests that while EURUSD moves sideways around 1.33, USDCHF could continue to appreciate. As such, we see a great potential return from being long the USD versus the CHF than the EUR.