CHF: A dovish SNB in a more hawkish world - Nomura

In view of analysts at Nomura, 2018 has been dubbed the year of “catch up” for many central banks that are yet to normalise policy after the Fed’s moves to tighten.

Key Quotes

“The BoE, the BoC, the ECB and depending on who you ask, possibly the BOJ could all continue or embark upon policy normalisation. But there are a few major central banks that are less likely to take hawkish action – the SNB is clearly one of them. The good news is that survey data and industrial production are at historical highs in Switzerland, the bad news is growth is yet to follow and the ugly is inflation is being held back by a host of factors that will likely persist. This is why we think the SNB will not rock the boat in 2018, and only in 2019 do we believe there is a risk of policy normalisation, but at a very gradual pace. CHF remains overvalued and its direction is dependent on EUR outperformance. This is why 1.20 in EUR/CHF remains one of our core trades.”