Bypass The SNB, Stay Long CHF

Why bulls will look beyond Thursday's rate decision.

Thursday sees the Swiss National Bank (SNB) meet, and the market is currently pricing almost 30bps worth of cuts. Despite some focus from the Street on the fact that the base rate will be back at zero by the end of this week (or even potentially negative), we feel that the rate change won’t materially change the trend of the appreciating Franc.

Rather, against a backdrop of a weakening USD, concerns about being labelled an FX manipulator, positioning still underweight from asset managers and other factors, it’s hard to make the case that we’ll see a weaker CHF anytime soon.