Swiss Franc Scores Lifetime High Against Euro Bolstering Its Safe-Haven Appeal

The Swiss franc (CHF) tapped a lifetime high against the euro (EUR) in the London session on Thursday since the Swiss National Bank (SNB) removed its floor under the single currency in 2015.

The EUR/CHF pair dropped by 0.68% earlier today to tap the 0.9532 low, its lowest point since January 2015, the same day the SNB removed its minimum exchange rate of 1.20 francs per euro.

Commenting on the franc’s price performance, Kenneth Broux, a senior strategist at Societe Generale, noted:

“The Swiss currency right now is the only safe haven in the G10, and I think that’s appealing to investors, as next week with the FOMC it could be another choppy week for stock markets if the (Fed) raises by 75 or even a hundred basis points.”

With the SNB set to hold a meeting with its members next week, Broux suggested that the bank could join the likes of the US Federal Reserve and European Central Bank (ECB) to implement jumbo rate hikes.

Swiss Franc to Rally Amid Aggressive Expectations from SNB

A Refinitiv report shows that money markets have priced in a 75 basis-point rate hike by the SNB in its next meeting, adding that there’s just under a 50% chance of a 100 bps rate hike.

Over with the US, Fed funds are proving in around a 30% chance that the central bank will increase its rates by an aggressive 100 basis points, with markets pricing in at least a 75 bps interest rate increase at its next meeting.

Finally, analysts at ING noted:

“We see a good chance that today’s data will not trigger any material re-pricing lower in Fed rate expectations, and the hawkish inertia into next week’s meeting means that the dollar can stay supported.”