BOJ Holds Rates at 1% as Inflation Outlook Eases, October Rate Hike Still Possible 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
Singapore Central Bank’s Exchange Rate Policy Explained: Why MAS Uses the S$NEER Instead of Interest Rates 
2025 Market Outlook: Key January Events to Watch 
Moldova Criticizes Russia Amid Transdniestria Energy Crisis 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
Brazil Cuts Selic Rate to 14% as Inflation Eases but Risks Persist 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Japan Services Producer Prices Rise 3.2% in June, Supporting BOJ Rate Hike Expectations 
Add as a preferred source on Google
SNB’s monetary policy is scheduled for next week. We upgraded CHF forecasts, in the recent past, to reflect both more negative global conditions (EM stress) and more favorable domestic conditions (oya GDP growth has accelerated from 1% a year ago to 3.4% in 2Q’18).
The franc may have rather underwhelmed since we published those forecasts – the TWI has shed around 1.5%, so giving back one-third of the gains it made from mid-May to mid-September - but we are not inclined to reconsider the forecast this month as we attribute this correction to largely temporary factors (a ceasefire for EM, evidence of some smoothing intervention from the SNB, albeit very low-key if at all, and receding risks of a disruptive Brexit).
The forecast thus continues to envisage modest appreciation in the franc, a move in EURCHF to 1.12 over the coming one-two quarters, albeit we have downgraded the risk bias from bullish to bearish as we are more conscious of the potential for the yawning rate differential between USD and CHF to generate at least intermittent interest from short-term traders to sell CHF (as may have occurred over the past month).
The surprising context to the franc’s slippage over the past month is that it has occurred despite the ratcheting up of tensions in Italy. In the prior six months, EURCHF was more than -90% correlated to Italian credit risk. Over the past month, however, the correlation to the BTP spread has flipped to +70% (exhibit 1). Courtesy: JPM
Trade tips:
Stay short GBPCHF from 1.3051. Marked at 2.29%. Lower stop to 1.30.
Buy 6M GBPCHF - GBPUSD vol spread, equal-vega notional.
Furthermore, on hedging grounds, we advocate shorting EURCHF futures contracts of mid-month tenors as the underlying spot FX likely to target southwards 1.1150 levels in the near run. Courtesy: JPM
Currency Strength Index:FxWirePro's hourly EUR spot index has shown 102 (which is bullish), while hourly CHF spot index was at 76 (bullish), while articulating at 09:32 GMT. For more details on the index, please refer below weblink:
