Swiss Franc Continues Downward Trend Against Euro Amid Yield Differentials

The Swiss Franc (CHF) continues to weaken against the Euro (EUR), with EUR/CHF reaching new highs. According to MUFG's Lee Hardman, this is due to widening yield differentials favouring the Euro.

Markets now expect further European Central Bank (ECB) hikes, with at least one more hike in September reportedly planned. This has led to a higher probability of ECB delivering two further hikes this year.

In contrast, Bloomberg reports that the Swiss National Bank (SNB) may keep rates at 0.00% until 2027. The SNB appears comfortable with the inflation outlook and is ready to sell Swiss Francs only against excessive appreciation.