We think the SNB will be less concerned with supporting CHF strength in 2024.

Weaker EU growth is associated with a stronger CHF Trade Weighted Index on a broader time horizon. So, if the EU remains trapped in a period of slow to negative growth, what some consider to be the CHF’s overvaluation is likely to persist for longer than expected. 

The bottom line is that while tailwinds will diminish as we enter 2024, the CHF could remain overvalued near term, given that Europe’s economic woes will likely extend into the first half of next year. However, the softer USD and easing rate cycles globally should see the CHF retreat from multi-year highs against other G10 crosses. 

We see the USD/CHF at 0.86 by the end of 2024.