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


Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift?
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures
China’s Growth Faces Structural Challenges Amid Doubts Over Data
Wall Street Analysts Weigh in on Latest NFP Data
European Stocks Rally on Chinese Growth and Mining Merger Speculation
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close
Bank of America Posts Strong Q4 2024 Results, Shares Rise
Global Markets React to Strong U.S. Jobs Data and Rising Yields
US Gas Market Poised for Supercycle: Bernstein Analysts
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential
China's Refining Industry Faces Major Shakeup Amid Challenges
Energy Sector Outlook 2025: AI's Role and Market Dynamics 



