Swiss Data Surprises, But SNB Policy Outlook Remains Unchanged
The latest economic data from Switzerland has exceeded expectations, showing stronger-than-anticipated growth in August's Consumer Price Index (CPI) and second-quarter Gross Domestic Product (GDP). This led to profit-taking in both EUR/CHF and USD/CHF.
Despite the positive data, Societe Generale strategists believe that the Swiss National Bank's policy outlook remains unchanged. They note that inflation is averaging 0.6% so far in the third quarter, which aligns with their prior forecast published in June.
The strategists suggest that market participants may find value in buying Swiss Franc crosses on weakness due to wider interest rate differentials between G10 central banks and the SNB, as well as subdued foreign exchange volatility. However, they also caution that specific risks tied to France could reassert the Franc's safe-haven appeal.