USD/CHF to surge higher above 0.95 on Fed hikes vs. dovish SNB – DBS Bank

Economists at DBS Bank expect the Swiss franc to weaken above 0.95 per US dollar on Federal Reserve hikes vs. dovish Swiss National Bank.

SNB to maintain its expansionary monetary policy
“Barring any unforeseen shocks, expect CHF to depreciate above 0.95 per USD in 2022.”

“As a negative-yielding currency, CHF was more resilient than EUR and JPY in 2021. We do not expect this to persist in 2022 on a stronger USD from Fed hike expectations.”

“There is no urgency for the central bank (SNB) to join its G10 counterparts in normalising monetary policy. SNB’s inflation forecast (0.5% in 2021, 0.7% in 2022, and 0.6% in 2023) indicates no imminent threat to price stability.”

“SNB will maintain its expansionary monetary policy and stands ready to intervene in the exchange rate market when necessary to support the nascent recovery from the pandemic.”