Despite the broader uptick in DM FX vol so far in February though, CHF vol underperformed this week despite EUR establishing multi-year lows in the spot market. Still, this does not obstruct our longer-term thesis that, with the SNB remains sidelined, the EURCHF price-finding process could evolve at an accelerating and non-linear pace and should thereby elicit a simultaneous rise volatility.
For now, the SNB continues to appear reluctant to resist CHF strength despite EURCHF touching multi-year lows (refer above chart), leaving the onus of recycling Switzerland’s large current account surplus squarely on private investors where capital outflows remain muted.
The recent PMIs may temper enthusiasm for EUR-downside in the short-term, but the fact is that the economy as a whole remains fragile and is still not particularly conducive to encouraging such outflows away of Switzerland. Indeed, CHF vega is likely to rise even despite lesser-than-expected fallout from the coronavirus, given that it is instead more of a consequence of Switzerland's ongoing BoP disequilibrium.
We remain long CHF vol through combined positions in a EURCHF put and long USDCHF FVA. Courtesy: JPM


UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure
Fed May Resume Rate Hikes: BofA Analysts Outline Key Scenarios
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms
Geopolitical Shocks That Could Reshape Financial Markets in 2025
Moldova Criticizes Russia Amid Transdniestria Energy Crisis
Wall Street Analysts Weigh in on Latest NFP Data
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed
Energy Sector Outlook 2025: AI's Role and Market Dynamics
2025 Market Outlook: Key January Events to Watch
European Stocks Rally on Chinese Growth and Mining Merger Speculation
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures
US Gas Market Poised for Supercycle: Bernstein Analysts
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift?
China’s Growth Faces Structural Challenges Amid Doubts Over Data 



