FxWirePro: Swiss franc might correct to 0.98, bearish outlook maintained

The recent bout of weakness in the dollar has pushed the Swiss franc to test parity against the dollar and we suspect that in the short term, franc might actually break below parity as the momentum is clearly not in favor of the dollar. However, we suspect that the strength of the Swiss franc is and would largely be driven by the weakness in the dollar, especially since the Swiss Central Bank (SNB) is largely expected to be the last man standing on the easing front.

Our forecast suggests that the strength in franc or the weakness in USD/CHF pair would largely be limited to 0.97 area and the broader trend would catch up and push the pair to as high as 1.08 in the medium term and towards 1.15 over a longer horizon.

It is worth noting that the bank secrecy laws are not as it used to be and that would hurt some portions of the inflows of money. Swiss National Bank would start sharing details of accounts with foreign countries. The processes are expected to kick start in 2018. But that won’t diminish the demand for Swiss passports. The country is a geographical safe haven too.