The Swiss Franc has weakened against the Euro, with the EUR/CHF exchange rate drifting back to the 0.92 level. According to ING’s Chris Turner, this movement is primarily driven by Swiss market interest rates lagging behind global trends, while markets are currently pricing in three European Central Bank (ECB) rate hikes over the next 10 to 12 months [1].
Turner notes that despite ongoing uncertainty in the Gulf region, the EUR/CHF pair has crept up, supported by the sell-off in the interest rate market and the anticipation of a potentially hawkish ECB meeting scheduled for Thursday. The expectation is that the pricing of three ECB rate hikes could persist if the ECB delivers a hawkish surprise [1].
Additionally, the Swiss National Bank (SNB) maintains an increased willingness to intervene in foreign exchange markets. First quarter FX intervention data, set to be released on 30 June, is expected to show a notable increase in SNB activity after a period of relative quiet [1].
Given these factors, ING expects the EUR/CHF to remain supported near 0.92, with the possibility of a move to 0.93 if the ECB adopts a more hawkish stance than anticipated [1].
CONCLUSION
The Swiss Franc's recent weakness against the Euro is attributed to lagging Swiss rates and expectations of ECB tightening. Ongoing SNB intervention and the upcoming ECB meeting are key factors to watch, with the EUR/CHF likely to remain supported near current levels.