CIBC don't see the SNB cutting rates this year
From the Canadian Rockies to the Swiss Alps
The Canadian Imperial Bank of Commerce (CIBC) explain their outlook for the EURCHF:
Despite a mild recovery in risk sentiment, EURCHF is trading close to 2y lows as the ECB remains accommodative. Although this would put pressure on the SNB to ease, market expectations for a cut by December have receded from a near certainty in early September to around 25%. We don't see the SNB cutting rates this year, but expect they will remain active in currency intervention
For your background understanding:
- the SNB tries to avoid CHF strength to reduce the impact on their largely export driven economy.
- Historically they tried 'pegging' the currency to a specific level which they defended robustly ( 1.2000 EURCHF level). However , that defence came at too great a cost and ultimately the SNB couldn't fight a strengthening CHF. The 1.2000 'Peg' was abandoned famously in January 2015.
However, they still engage in EURCHF buying, but in a more ad-hoc manner than pinning a pegged level. The question is, 'how low will they let the EURCHF go?'