BTMU FX Strategy Research notes that CHF continues to slide and remains the stand-out mover in the FX markets with EUR/CHF moving from Monday’s intra-day low to today’s high, up some 3.3%.
“We can only put this down to the delayed response to a number of factors that have finally triggered a liquidation of long franc positions. The improved political outlook in Europe following the French elections, the turn in expectations in relation to ECB monetary policy and the broader signs of global reflation as expectations of stronger global growth intensify have all combined to help weaken the franc.
Looking ahead, BTMU argues that CHF selling is likely to continue as the move this week could have a significant impact in shaping expectations.
"With the SNB strongly arguing for significant weakness, investors may quickly see the franc as the line of least resistance for expressing a bullish EUR view, safe in the knowledge that sharp moves lower of the franc will have the full backing of the SNB. IMM speculative data actually shows the largest long position since 2014 amongst leveraged funds – so there could be more impetus in this trade yet,” BTMU adds.
Source: BTMU Research
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