EURCHF is finally on the move again as EU tail risk gets priced out of the picture and as we have negative interest rates declared on Swiss deposits. Can this continue? This is not a technical look at EURCHF, as this is only the second real bout of noticeable movement since the EURCHF first began crawling along the 1.20 peg back in April/May. The impetus here was two-fold: first, the EU tail risk continues to unwind in the wake of the Greece deal and there is a great deal of complacency in general. And yesterday, Credit Suisse said that it would charge negative interest rates on CHF balances, if only for some clients. The upside could continue here for EURCHF, but only if the short term environment remains risk positive and EU tail risks continue to unwind. This Thursday also sees an ECB meeting, though a rate cut might not necessarily have much bearing on EURCHF downside if risk appetite/EU spreads take the news positively. The next CHF-related event risks include the November SNB reserves data set for release this Friday and then the quarterly SNB meeting that could be used to move the floor if the SNB is feeling particularly frisky. Note that the last round of CHF weakening also occurred ahead of the SNB meeting, only to fizzle in its wake.
Chart: EURCHF
SAXO BANK