UBS: Swiss Franc to Weaken Against Select Currencies

UBS Projects Continued Franc Weakness

A recent analysis from UBS indicates the Swiss franc is expected to weaken further against several higher-yielding, pro-risk currencies through the remainder of the second quarter. The bank specifically highlighted the Australian dollar, Brazilian real, and Norwegian krone.

Specific Currency Pair Forecasts

UBS remains skeptical about the EUR/CHF pair, seeing limited upside potential beyond the 0.9260 level. The firm suggests this level represents an attractive entry point for short positions. For USD/CHF, the bank anticipates that rallies toward the 0.80 mark will likely attract selling from local corporations.

Impact of Central Bank Policy

The cautious outlook on EUR/CHF is linked to the European Central Bank's monetary policy. UBS notes that projected ECB rate hikes, combined with a terms-of-trade shock, could have negative implications for economic growth in the euro area, thereby dampening support for the currency pair.

Outlook Summary

The analysis concludes that the recent trend of Swiss franc weakness against select risk-on currencies has room to extend. This contrasts with the franc's performance against major reserve currencies, suggesting a differentiated market trajectory.

FAQ

Q: Which currencies does UBS expect the Swiss franc to weaken against?
A: UBS projects weakness against high-yield currencies with strong pro-risk characteristics, including the Australian dollar, Brazilian real, and Norwegian krone.

Q: What is the UBS view on the EUR/CHF currency pair?
A: UBS is skeptical of upside potential for EUR/CHF beyond 0.9260 and views rallies to this level as attractive entry points for short positions, citing concerns over ECB policy impacting euro area growth.

Source: Investing.com