Swiss Franc to strengthen vs USD as economic situation in Europe improves

The Swiss franc briefly strengthened through 0.95 against the USD earlier this month after a disappointing US March payrolls report triggered broad-based selling of the USD. 

The dollar has since rallied, pushing USD/CHF to month highs but remains well below its recent peak (1.0132) in mid-March. 

Most analysts expect firmer US data to support the call for a first rate hike from the Fed in September, underpinning a stronger USD. 

Lloyds Bank sees USD/CHF at 1.02 at end Q3 2015. However, aligned with the core view of a firmer euro later this year, they forecast the franc to also strengthen against the USD as the economic situation in Europe improves. 

The Swiss government recently decided that there was no need for a stimulus package due to the abandoning of the EURCHF cap. 

"We forecast USD/CHF at 1.00 at end 2015 and 0.96 at end 2016. EUR/CHF is forecast at 1.07 and 1.10, respectively", says Lloyds Bank.