EUR/CHF: Likely to be affected by the Italian budget noise – ING

Strategist at ING, consider that the current political situation in Europe with Brexit and the Italian budget drama will likely keep the Swiss franc bid. The see EUR/CHF moving between 1.1180 and 1.1380 next week. 

Key Quotes: 

“Messy European politics – both Italy budget risks and Brexit noise at the Tory party conference – will likely keep the Swiss franc, a European haven, bid over the coming week. While we did see EUR/CHF move above 1.14 on a trade war haven unwind, the pair fell sharply below 1.13 on the back of the budget-related Italian asset sell-off on Friday.”

“It’s difficult not to see further Italian budget noise here weighing on EUR/CHF – especially ahead of potential downgrades by rating agencies and budget clashes with the European Commission in October. The risks, however, is that we could see the Swiss national bank intervening on any sharp moves below the 1.12-1.13 level.”

“On the Swiss franc side, the key data point to note next week is September CPI due Friday, where consensus expects +0.2% MoM increase (+1.1% YoY). Although Swiss data rarely tends to have much of a sustained impact on the currency, especially during times when the focus for FX markets is on European politics.”