EUR/CHF climbs back above parity. Economists at MUFG Bank believe that the pair could climb as high as 1.04.

SNB is becoming more tolerant of a weaker CHF

“The SNB has confirmed that it has been intervening to support the Franc recently to prevent a sharper move lower from reinforcing upside inflation risks. Yesterday’s move higher could then encourage speculation that the SNB is becoming less concerned by upside inflation risks and more tolerant of a weaker CHF.”

“The favourable growth developments should encourage the ECB to keep tightening policy at a faster pace at upcoming policy meetings when we expect the policy rate to reach 3.00% by the end of Q1. It leaves room for EUR/CHF to extend its advance back to levels recorded in the 1H of last year when it was trading between 1.0200 and 1.0400.”