Best Investment Manager's Guide: Swiss Franc Weakness Expected to Continue
Swiss franc weakness has been a hot topic in the financial markets, with Bank of America Securities pointing out that it's the most consensus trade of the year. Despite this, the currency has not weakened as much as anticipated, trading 0.1% higher at 0.8525 as of 08:25 ET.
The reasons behind the expected weakness are solid, with Switzerland known for below-target inflation, a central bank committed to preventing significant FX appreciation, and a defensive domestic asset market. However, analysts at BOA Securities note that the second half of the year has seen a recovery in the Swiss franc due to geo-political factors and regime shifts.
Looking ahead, the U.S. bank predicts that the carry trade will continue to weigh on the Swiss franc. With the Swiss National Bank set to make its next policy decision on Sept. 26, BOA suggests that the trend favors some upside in the near term but warns that we may be entering a "sell zone."
In conclusion, if you're considering investing in the Swiss franc or have exposure to CHF, it's important to monitor the upcoming SNB policy decision and be prepared for potential fluctuations in the currency. Stay informed and consult with a financial advisor to make the best decisions for your portfolio.