Swiss Franc Nears Decade High as Volumes Surge on Haven Flows
The Swiss franc is closing in on a decade high against the euro as haven demand ripples through markets due to renewed tariff and political concerns.
The currency touched 0.92146 per euro on Monday, leaving it now about 0.2% shy of levels last seen in January 2015.
It has been the only Group-of-10 currency to appreciate against the dollar over the past month following a resurgence in tariff worries, political uncertainty in France and Japan, and renewed strains at US regional banks.
Options flows underscore that demand. Data from the Depository Trust & Clearing Corporation show euro-Swiss franc volumes rose to their strongest since August on Friday, while those for dollar-Swiss franc hit a one-month high.
“There is merit in the NOK and SEK (more growth) and the safe-haven qualities of the CHF, relative to the EUR and GBP,” said Kit Juckes , capturing the tension between pro-growth trades and classic safety bids.
Hedging costs have risen to their most elevated since mid-August, with the premium to own franc topside through options returning to levels last seen in June as traders seek protection and directional exposure.
The policy backdrop will be tested this week. Swiss officials will publish a summary of their September interest-rate meeting on Thursday, with investors set to parse the document for how the Swiss National Bank intends to handle a currency pressing multi year highs.
With the SNB’s key interest rate back at zero and a history of targeted intervention, markets will look for any hints on thresholds for action and the degree of tolerance for further franc strength.
have largely abandoned the idea of a return to negative rates, consistent with money-market pricing , but the bank has a range of policy options as it seeks to balance imported disinflation against external shocks.
Analysts at Danske Bank A/S argue the central bank would be inclined to lean on intervention before contemplating negative rates, noting that a stronger real trade-weighted franc and potential tariffs on Swiss exports to the US could cool price pressures further. Even so, they look for EUR/CHF to drift lower over the coming year.
