Bank of America Securities explains that many people expected the Swiss franc to weaken this year, but it has not weakened as much as predicted. Currently, the Swiss franc is trading slightly higher at 0.8525, up 1.3% since the beginning of the year but down 0.6% in the last month.
The reasons for the anticipated weakness in the Swiss franc are solid. Switzerland has a history of having below-target inflation. Additionally, it has a central bank that works to prevent the currency from getting too strong and a stable domestic market. These factors suggest that the Swiss franc should weaken. However, things have changed throughout the year. The first half of the year saw significant weakness in the currency, but there has been a recovery in the second half.
Looking ahead, Bank of America Securities believes that the carry trade will continue to put pressure on the Swiss franc. They predict some upside in the near future but think that selling pressure will increase before the Swiss National Bank makes its policy decision on September 26.
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