forex trading outlook today - EUR-CHF predictions 2012 : The euro area economy faces significant headwinds and is most likely in recession currently. We expect the economy to shrink in both Q4 2011 and Q1 2012. However, we do expect the recession to be fairly short as headwinds ease and some of them even turn into tailwinds. In particular stronger growth in the US and Emerging Markets will help underpin euro area growth during 2012
Unicredit say they see further euro weakness as the robustness we have seen during much of 2011 – driven by banks’ repatriation of assets – comes to an end. "After 5-7 difficult years, the overvaluation of the euro finally seems to be over – and if followed by a period of undervaluation, then that should be good for growth, compared with our base-case scenario," say analysts.
Looking at the Swiss Franc, "we expect more CHF weakness over time, albeit at a fairly slow pace. The floor the SNB set at 1.20 for EUR-CHF in early September is credible and (wisely) investors have never showed any intent to test its solidity."
However, a weaker EUR-USD in 1H12 will be an obstacle to a rapid and sustained EUR-CHF rally.
"Yet, given the SNB's strong and explicit commitment to ensuring a weaker franc over time, we still pencil in EUR-CHF of up to 1.32 for next year. The higher values towards 1.40 that we expect in 2013 could only come earlier if the SNB proves more aggressive in its FX strategy, increasing the current floor of 1.20 to 1.30 (a hypothesis still not included in our scenario, given the expected risk picture, but frequently heard in the market)," say UniCredit.
Unicredit say they see further euro weakness as the robustness we have seen during much of 2011 – driven by banks’ repatriation of assets – comes to an end. "After 5-7 difficult years, the overvaluation of the euro finally seems to be over – and if followed by a period of undervaluation, then that should be good for growth, compared with our base-case scenario," say analysts.
Looking at the Swiss Franc, "we expect more CHF weakness over time, albeit at a fairly slow pace. The floor the SNB set at 1.20 for EUR-CHF in early September is credible and (wisely) investors have never showed any intent to test its solidity."
However, a weaker EUR-USD in 1H12 will be an obstacle to a rapid and sustained EUR-CHF rally.
"Yet, given the SNB's strong and explicit commitment to ensuring a weaker franc over time, we still pencil in EUR-CHF of up to 1.32 for next year. The higher values towards 1.40 that we expect in 2013 could only come earlier if the SNB proves more aggressive in its FX strategy, increasing the current floor of 1.20 to 1.30 (a hypothesis still not included in our scenario, given the expected risk picture, but frequently heard in the market)," say UniCredit.
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