EUR/CHF Hits New High as Swiss Franc Weakens Against Euro
The Swiss Franc has continued to weaken against the Euro, pushing EUR/CHF to new highs. According to MUFG strategist Lee Hardman, market pricing now reflects expectations for additional monetary tightening by the European Central Bank (ECB), while the Swiss National Bank (SNB) is seen remaining on hold.
The divergence in policy outlooks has reinforced selling pressure on the Swiss Franc, as investors position for relatively higher returns on Euro-denominated assets compared with Swiss assets. Market participants are adjusting to the prospect that the ECB will continue raising rates, while reports suggest the SNB may keep its benchmark rate unchanged at 0.00% for an extended period.
The SNB is comfortable with the current inflation outlook and focused on resisting sharp, disorderly strength in the Swiss Franc rather than its present weakness. However, it has reiterated that it is prepared to intervene by selling Swiss Francs to curb 'rapid and excessive appreciation,' but such action is currently viewed as unnecessary.