Time for some weakness
The world’s most boring currency may get some life into it in 2018 and we think that will prompt a generalised weakening of the franc. If our assessment of the global economy and the near term macroeconomic risks are correct then the need for CHF as a safe haven currency in 2018 should continue to fall. While monetary conditions in Europe are set to tighten in response to higher inflation, the Swiss National Bank is not in a position to do so given inflation dynamics in Switzerland.
Growth will remain strong but we don’t believe that will translate through to the currency. EURCHF looks cheap at 1.16 at the moment and we think that the pair is likely to test 1.20 in the coming quarters.