Swiss Franc Falls on Ukraine Peace Deal Hopes — Market Talk

The Swiss franc's recent pullback likely reflects a reduction in demand for safe havens rather than renewed Swiss National Bank interventions, Commerzbank's Michael Pfister says in a note. The franc's falls sparked speculation that the SNB intervened to curb its strength. However, it's difficult to verify this as estimates based on sight deposit data are often inaccurate and fourth-quarter figures aren't published until March, he says. Moreover, the SNB has repeatedly indicated it would only intervene if the franc moves significantly. Commerzbank's fourth-quarter forecast of 0.92 for the euro versus the franc has been almost reached, and it's "unlikely to fall much further." The franc has fallen in recent days and last trades slightly weaker at 0.9283 per euro. (renae.dyer@wsj.com)

The Swiss franc's strength looks set to persist as the Swiss National Bank could remain cautious about cutting interest rates below the current 0% at Thursday's meeting, MUFG Bank's Lee Hardman says in a note. SNB officials have clearly indicated a higher hurdle to re-impose negative rates given the undesirable side effects, he says. "There is also optimism after recent trade talks between the U.S. and Switzerland that a deal will be done to lower the tariff rate." That reduces the prospect of negative rates. The euro rises 0.1% to 0.9347 francs. (renae.dyer@wsj.com)

The Swiss franc could rise further after Swiss National Bank Governor Martin Schlegel played down the currency's strength, ING's Chris Turner says in a note. In an interview with Migros magazine, Schlegel said the franc's real appreciation isn't as significant as it appears given prices are rising much faster in other countries, increasing company costs. He added that there is a high hurdle to reintroducing negative interest rates. His remarks could allow the franc to benefit further from safe-haven flows amid political and debt sustainability concerns elsewhere, Turner says. The euro could fall below this year's low of 0.9220 francs, he says. The euro falls 0.1% to 0.9325 francs after reaching a five-week low of 0.9312 francs earlier, LSEG data show. (renae.dyer@wsj.com)

The Swiss National Bank would likely use foreign exchange interventions as its primary tool for curbing any sharp franc rally on demand for safe havens, UBS Global Wealth Management's Dominic Schnider says. Switzerland's inclusion on the U.S. Treasury's watchlist for currency manipulators wouldn't present a major obstacle, he says. "The SNB's FX intervention efforts remain focused on the euro versus the franc rather than the dollar versus the franc, as most of the Swiss trade is conducted with Europe." That means the dollar could fall to 0.77-0.76 francs over the coming quarters without triggering interventions, he says. The dollar is last down 0.1% at 0.8047 francs. The euro rises 0.1% to 0.9371 francs and UBS expects it remain stable in coming quarters.(renae.dyer@wsj.com)

With the Swiss central bank (SNB) struggling to keep pace with European Central Bank rate cuts and the international investment environment remaining fragile, it looks like can stay under pressure near 0.92/0.93 for the rest of the year, said INF.

It could trade lower if the SNB's hands are more tied than the bank think and foreign exchange intervention is more limited.

The outlook should improve in 2026, however, stated ING.

Fiscal stimulus should start to register in eurozone growth numbers from the start of next year and in the second half of 2026, investors could even be speculating over the first ECB rate hike.

That could bring back to 0.97/1.00 by late 2026, according to the bank.

The Swiss National Bank's limited scope to cut interest rates could lead to further Swiss franc strength, Barclays analyst Lefteris Farmakis says in a note. The SNB's constraints regarding rate cuts are back in focus given stubbornly low inflation and the central bank's reluctance to reintroduce negative rates after lowering its policy rate to 0% this month, he says. "Less wiggle room on rates policy means the choice for the SNB increasingly becomes one of heavier foreign exchange interventions or franc strength, given downside risks to the broader European economy." Barclays expects the euro to fall to 0.92 francs by the second quarter of 2026 from 0.9383 currently. (renae.dyer@wsj.com)