CHF: Does the SNB have options? – Rabobank

Analysts at Rabobank see the EUR/CHF pair moving toward 1.0800 on a 3-month view amid risk aversion. 

Key Quotes: 

“Compared with the commentaries produced by its peers, the outlook painted by the SNB’s policy statement on September 19 was one of the gloomiest. Weaker growth and inflation prospects abroad combined with the stronger CHF contributed to a low forecast for domestic price pressures. Growth forecasts were also revised down. Despite this the SNB provided no indication that it was ready to push rates further into negative territory. Like the BoJ and the ECB, it is concerned about the negative impact of negative rates on the banking sector and announced a revision in how the exemption threshold for banks is calculated.”

“The CHF popped higher on speculation that the SNB may be lacking the tools to take fresh policy decisions to offset economic headwinds and safe haven demand for the CHF. We see risk of EUR/CHF edging towards 1.08 on a 3 month view largely on anticipation of another round of safe haven buying.”