Swiss Franc Weakening Continues Against Euro Amid ECB Hike Expectations
The Swiss Franc (CHF) continues to weaken against the Euro (EUR), with EUR/CHF reaching new highs. According to MUFG's Lee Hardman, widening yield differentials favour the Euro.
Markets now price further European Central Bank (ECB) hikes, while Bloomberg reports suggest the Swiss National Bank (SNB) may keep rates at 0.00% until 2027. The SNB appears comfortable with the inflation outlook and stands ready to sell Swiss Francs only against excessive appreciation.
This ECB-SNB divergence puts pressure on the Swiss franc, causing it to weaken further.