Stop-loss triggered on long USDCHF; Norges Bank should play into short EURNOK view
The post-FOMC dollar sell-off triggered the stop on our long USDCHF position for a total loss of 1.65%. We do not expect any major surprises from the Swiss National Bank which should keep its current rate and CHF ceiling policies unchanged despite likely lifting its growth projections. We still believe that in the context of the narrower European risk spreads and stronger global growth, CHF rallies against both USD and EUR represent selling opportunities. Elsewhere in central bank events we expect the Norges Bank announcement to be a positive for NOK. We believe that the recent data flow should push the central bank to remove its dovish bias today, given that core inflation has now risen to a 2.5% annual pace from 1.4% at the time of the June meeting. Although this is already partly reflected in the rates markets, we see scope for a catch up in NOK. We maintain a short EURNOK trade recommendation with a target of 7.6680 and a stop at 7.9850.
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BNP Paribas