The Swiss Franc should be at an advantage due to the disinflation progress already achieved in Switzerland. We nonetheless project a weaker CHF. That is because another aspect is of relevance when it comes to the Franc. Due to the SNB’s interventions, the current CHF exchange rate is likely to be distorted towards a stronger Franc. 

If inflation in Switzerland, as we expect and as the SNB is likely to expect as of Thursday, will fall back into the target area on a sustainable basis, the acceptance of higher EUR/CHF levels amongst SNB members should rise again, with any speculative distortions being reduced again. We assume that this effect is likely to dominate for the time being.