ING Sees Room for USD/CHF Rally into Fed October Hike

ING's research suggests that despite the Swiss National Bank (SNB) tweaking its stance on currency intervention, there is still room for a rally in the USD/CHF exchange rate.

The SNB removed the reference to an 'increased willingness' to intervene from its policy statement, but retained its commitment to act when necessary. ING views this as a minor adjustment reflecting the franc's recent weakness rather than a change in stance.

Market pricing remains too hawkish for the Swiss franc, according to ING, and there are few reasons to tighten policy in the foreseeable future. In fact, a hike is already fully priced in by March, which suggests that there won't be any significant changes in monetary policy soon.

Despite this, ING sees potential for downside risks in the franc, particularly with EUR/CHF potentially retesting the 0.9480 highs seen earlier in September. However, they believe that USD/CHF has even greater upside potential and could rally to 0.85 in the near term if there is an October hike from the Federal Reserve.