Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
US Economy Fueled by AI Investment Faces Rising Risks Ahead of Fed Meeting 
Rice feeds billions of people – but its role in fueling climate change is growing 
Wall Street Analysts Weigh in on Latest NFP Data 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
Morgan Stanley Names Top AI Security and Data Center Stocks for 2026 
JPMorgan Sees Biotech Sector at Turning Point, Upgrades Top Pharma Stocks 
Cuba needs a long-term solution to its energy crisis 
Gold Cracks Below $4,500 as Safe-Haven Shine Fades; Technical Breakdown Signals Sell-on-Rallies Toward $4,000 
2025 Market Outlook: Key January Events to Watch 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Stock Futures Dip as Investors Await Key Payrolls Data 
Goldman Sachs Sees Stronger U.S. Dollar as Global Economic Gaps Widen 
The EURCHF exchange rate has already eased back below the 1.13 mark and has therefore returned into areas that are likely to begin causing the Swiss National Bank (SNB) discomfort.
The central bank had seemed much more relaxed as regards the exchange rate when it climbed from levels around 1.10 to above 1.14 last year. Even though inflation in Switzerland is positive again, core inflation has remained at only 0.5% since the start of the year, which is anything but comfortable.
As a result, we would assume that the SNB will still not like to see strong franc appreciation. There is an acute risk of the SNB intervening the closer the EURCHF exchange rate gets to the 1.10 mark.
We maintain a decent exposure to CHF this week but rotate a slightly underwater position in USDCHF into an outright short in EURCHF due to ongoing noise in Turkey and what could be a greater focus by investors on the Italian budget into September.
GBPCHF has performed very well as investors for whatever reason have belatedly woken up to the non-negligible risk of a no-deal Brexit, and the sensitivity of GBP to this would suggest that investors have some reasonable GBP exposures that are under hedged.
As for CHF itself, we continue to highlight the ever-present positive balance of payments disequilibrium that can only be exacerbated by heightened EM stress, namely a current account that is too large for private sector investors to recycle given still relatively low average rate differentials between CHF and ROW.
The SNB has pretty much single-handedly recycled this surplus for an entire decade since the GFC hit, but with a balance sheet that has mushroomed to 125% of GDP as a result of this systematic FX intervention, legitimate questions marks exist over the SNB’s capacity and willingness to continue to take the other side of commercial flows, let alone absorb another round of deleveraging of whatever cross- border CHF funding positions may exist.
It is quite notable that the SNB appears not to have intervened since EURCHF rejected 1.20 back in early May.
Short in EURCHF at 1.1265, stop at 1.1350.
EURCHF risk reversal numbers and positively skewed of implied volatilities of 2m tenors signify mounting risks. Accordingly, we advocate 2m (1%) in the money -0.79 delta put options, the rationale for choosing such derivative instrument is that the deep in the money call with a very strong delta would move in tandem with the underlying move.
Stay short GBPCHF from 1.3051. Marked at 2.29%. Lower stop to 1.30.
Buy 6M GBPCHF - GBPUSD vol spread, equal-vega notional. Courtesy: JPM
Currency Strength Index: FxWirePro's hourly EUR spot index has shown 5 (which is neutral), while hourly CHF spot index was at 84 (bullish), while articulating at 12:22 GMT. For more details on the index, please refer below weblink:
