Market Outlook: Decreased Demand for Safe Havens May Weaken Swiss Franc Following SNB Rate Cut

Bank of America has argued that the Swiss Franc could decline due to a decreased demand for safe-haven assets and the possibility of further interest rate cuts by the Swiss National Bank. BofA forex strategist Kamal Sharma stated that with the significant event risk of the U.S. presidential elections dissipating, safe-haven flows into the franc may decrease. Sharma suggested that since the SNB does not face an inflation issue, it could lower rates at every meeting until the policy rate reaches 0.5%. "However," he added, "increasing political concerns in Germany mean that EUR/CHF could face pressures similar to those witnessed in June. There is a more compelling case for selling the franc against other currencies, including the dollar and the pound."