Big banks and investors are bullish on the Swiss franc ahead of this week’s central bank meeting, defying the market consensus for a weaker currency. JPMorgan, Citigroup, and Pictet Asset Management all see the franc gaining strength in the coming months, driven by global trade tensions and demand for safe-haven assets. This goes against the expectation that the Swiss National Bank will continue to cut interest rates and potentially intervene to weaken the currency. However, these firms believe that the SNB will hold off on intervention for now, as the Swiss economy remains solid and the strong franc is less of a concern for the country’s growing pharmaceutical industry. Pictet Asset Management has a strategically long position in the franc against the dollar, citing strong growth, a current-account surplus, and a lack of budget deficit as reasons to buy the currency. The franc has been the best-performing G10 currency after the yen since June, and is currently trading at its strongest level against the euro since January 2015. While markets are pricing in a 50% chance of a half-point rate cut at this week’s SNB meeting, JPMorgan sees the franc gaining around 5% against the euro by mid-2025, much stronger than the median forecast of analysts. This bullish sentiment towards the franc reflects concerns about global trade tensions and political fragmentation, as well as the Swiss economy’s resilience and the currency’s safe-haven status.
Lun. Dic 23rd, 2024
