Diminishing 'safe haven’ allure alongside a dovish 50 bps hike by the Swiss National Bank (SNB) should see the CHF weaken over the near term, economists at HSBC report.

CHF’s ‘safe haven’ appeal may diminish

“The ‘safe haven’ allure of the CHF may start to wane, as many of the Eurocentric risks – most notably around periphery debt – appear to have topped out alongside the bottoming out of European data and a potential turn in European inflationary pressures.” 

“The SNB is expected to deliver a 50 bps hike bringing the rate to 1.00% at its 15 December meeting. But inflation has never gotten as excessive in Switzerland as elsewhere, and we think that the SNB will leave rates flat at 1.00% after the December meeting. Any signal that the hiking cycle is close to its end will come as a disappointment to the rates market.”

“We expect the CHF to weaken against the USD over the near term.”