UBS Maintains EUR/CHF Forecast at 0.94 Amid Swiss Franc Safe-haven Demand

Forex

Economic

Summary:

UBS has maintained its EUR/CHF forecast at 0.94 for the period spanning the fourth quarter of 2025 through the third quarter of 2026, despite recent downward pressure on the currency p...

UBS has maintained its EUR/CHF forecast at 0.94 for the period spanning the fourth quarter of 2025 through the third quarter of 2026, despite recent downward pressure on the currency pair.

The EURCHF exchange rate has experienced sustained downward pressure recently due to global political events and the ongoing rally in gold prices, which has bolstered the Swiss franc’s position as a safe-haven currency, according to UBS.

Safe-haven demand for the Swiss franc currently remains elevated, but UBS expects this to change in the medium term as U.S. political and trade uncertainties resolve, potentially making the CHF less attractive and allowing the EUR/CHF to gradually rise toward the 0.94 target.

With Swiss interest rates at zero, UBS analysts believe the euro offers better total returns than the Swiss franc, supporting their maintained forecast for the currency pair.

The bank’s outlook suggests a stabilization of the EUR/CHF exchange rate in the coming quarters, despite current market pressures that have strengthened the Swiss currency against the euro.

Source: Investing

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Daniel Carter

Political

U.S. President Donald Trump welcomes Ukraine's President Volodymyr Zelenskiy at the White House in Washington, D.C., U.S., October 17, 2025.

U.S. President Donald Trump has signaled a shift in support toward Russia's Vladimir Putin as he looks for a quick end to the war in Ukraine, likely striking fear into Ukrainian officials.

Trump held a tense meeting with Ukrainian President Volodymyr Zelenskiy at the White House on Friday, with the potential supply of U.S. long-range cruise missiles, Tomahawks, on the agenda.

Zelenskiy walked away from the meeting not only empty-handed, but apparently upbraided by Trump, who said Ukraine accept Russia's terms for ending the war — by handing over the entire eastern territory of Donbas, the epicenter of ongoing fighting in Ukraine.

Speaking to reporters this weekend, Trump said for Donbas to be "cut the way it is."

"It's cut up right now, I think 78% of the land is already taken by Russia," he said on Air Force One on Sunday. "They should stop right now at the battle lines ... Go home, stop killing people and be done."

In the meeting with Zelenskiy, Trump also warned the Ukrainian leader that Putin had told him — in a lengthy phone call on Thursday in which they agreed to hold in-person talks in Hungary — that Putin would "destroy" Ukraine if it did not agree to the demand.

The meeting between Trump and Zelenskiy descended into a "shouting match," the Financial Times reported, with Trump "cursing all the time," according to unnamed people familiar with the matter cited by the FT.

In a Truth Social post, Trump described the meeting as "very interesting, and cordial," but said he had "strongly suggested" to both leaders that it was time to end the war.

"Let both claim Victory, let History decide!" he said in the post Friday.

Zelenskiy put on a brave face, telling NBC News' "Meet the Press," in an interview recorded Friday after the meeting with Trump, that "we are not losing this war, and Putin is not winning." He also remained optimistic despite leaving the White House without the Tomahawk missiles he was coveting.

"It's good that President Trump didn't say 'no,' but for today, didn't say 'yes,'" Zelenskiy told "Meet the Press" moderator Kristen Welker in the interview, which aired Sunday.

He also said he was ready to join Putin and Trump's upcoming summit in Budapest, which could take place in the next few weeks. Whether Zelenskiy will be invited to Hungary remains to be seen, however.

As well as declining to provide Tomahawk missiles for Ukraine, which Trump had previously mooted in an apparent bid to bring Russia to the negotiating table, Trump also mused about giving security guarantees to both Kyiv and Moscow, Reuters reported, citing two sources familiar with the talks.

CNBC has contacted the White House for further comment and is awaiting a response.

US President Donald Trump meets with Ukrainian President Volodymyr Zelenskiy (L) in the Cabinet Room of the White House in Washington, DC, on October 17, 2025.

Close followers of Trump-Putin-Zelenskiy relations fear the U.S. president is easily swayed by the veteran Russian leader's arguments over Ukraine. They say Trump does not appear ready or willing to exert more pressure on Putin, be it in the form of more arms transfers to Kyiv, or more economic restrictions on Russia.

"We keep dismissing Donald Trump as kind of 'Everybody's Fool' because he's so bombastic and says many things a mile a minute, but he actually is being very transactional about the relationship," Nina Khrushcheva, The New School professor of international affairs, told CNBC "Squawk Box" Friday.

"Everybody keeps pulling him one side or another, be it the Russian side or Ukrainian side. But he's not taking sides, and he's really playing, interestingly, both hands."

She noted that Trump still wants to win over Putin, but is also keeping him on a "tight leash," demonstrated by his threat to give Ukraine more weapons.

"So far, I think it is working. He's not giving either side what they wanted, but he keeps going, and eventually, potentially, they may agree to some sort of a peace agreement," she said.

Michael O'Hanlon, director of foreign policy research at the Brookings Institution, told CNBC that Putin is likely to wait Trump out.

"I think it would be more effective [for Trump] to combine the military threat with greater economic pressure, but we'll see maybe that comes later," he noted Friday.

O'Hanlon said there were several ways the U.S. could ramp up the pressure on Moscow, including another U.S. aid package for Ukraine and a bigger crackdown on Russia's "shadow fleet" of tankers facilitating shipments of Russian oil to circumvent the oil price cap and sanctions.

"We don't do much trading with Russia, but, of course, other countries do, and I think it's time to talk to not just India, but also China about a strategy whereby they would consider reducing their interaction, their economic interaction, and you threaten secondary sanctions if you don't get that kind of help," he said.

"So those are the different pieces. Not all of them have to happen at the exact same minute, and they can happen. They can be phased in, but I think President Trump is a little too fixated on just the Tomahawks, plus his personal rapport with Putin, and I don't think that's going to be enough to stop Russia."

Source: CNBC

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Gerik

Economic

Vietnam’s Two-Wheeled Dilemma: Gas-Powered Legacy vs. Electric Ambitions

Vietnam’s love affair with motorbikes, long considered the backbone of its daily life and economy, is facing an unprecedented transformation. The government’s plan to ban gas-powered motorbikes from central Hanoi by July 2026 signals a firm push toward electrification in a country with over 77 million two-wheelers, including millions concentrated in its two largest cities. The national target aims for over 20% of all motorbikes to be electric by 2030.

The government cites environmental urgency: Vietnam suffers from some of the world’s worst urban air pollution, with an estimated 70,000 deaths annually linked to poor air quality. Electrifying the motorbike fleet a major contributor to urban emissions is a central pillar in the country’s climate and public health strategy.

Riders and Manufacturers Split on Speed of Change

While there’s public support for cleaner air, many riders remain cautious. Gas motorbikes still offer cheaper upfront costs, easier maintenance, and longer ranges. For low-income workers like ride-hailing driver Ta Manh Cuong, electric bikes remain unaffordable despite government subsidies. His “iron horse” a term many Vietnamese affectionately use for their bikes is a symbol of both livelihood and loyalty.

Motorbike manufacturers share these concerns. Honda and Yamaha, which together dominate over 97% of the local market, argue that the 2026 deadline is too aggressive. Honda only began selling e-bikes in Vietnam this year and says the infrastructure and affordability gap are too wide to facilitate such a rapid switch.

Electric Surge: Startups and VinFast Lead the Charge

Nonetheless, electric vehicle (EV) sales are rising rapidly. In the first eight months of 2025, sales of smaller e-bikes jumped 89% and full-sized models surged 197%. VinFast, a subsidiary of Vingroup and already a major player in Vietnam’s EV space, quadrupled its motorbike sales this year and overtook regional rival Grab in the ride-hailing sector through its Green SM platform.

VinFast is spearheading infrastructure development with plans to build 150,000 battery-swapping stations nationwide. It also launched a battery-swapping e-bike priced around $760 and offers generous financing and subsidy packages to consumers, including low-interest loans and full registration fee waivers. Smaller players like Dat Bike, which recently raised $22 million in funding, are also scaling production and performance to match the speed of transition.

Despite their progress, even EV champions like Dat Bike’s CEO Son Nguyen caution that long-term adoption will depend more on product quality than policy alone. “Incentives can help add momentum, but long-term success depends on building products that win on their own merits,” he said.

Policy Tools: Loans, Tax Breaks, and Subsidies Aim to Ease Transition

To ease the disruption, Hanoi is offering income-based subsidies of $120–$200 for qualifying buyers of e-bikes priced over $590 and will waive registration and license plate fees until 2030. Ho Chi Minh City, meanwhile, plans to replace 400,000 gas-powered bikes with EVs by 2028, starting with a 2026 ban on fossil-fuel-powered delivery and ride-hailing vehicles. It also plans to implement low-emission zones and offer tax incentives and loans to affected businesses.

Still, concerns linger among small business owners. Bao Ngoc Cao, who rents gas bikes to tourists and expats, fears losing access to core areas of Hanoi, threatening her business model. While she supports the environmental goals, she calls for clearer guidelines and greater financial support to help SMEs like hers adapt.

Vietnam’s Domestic Advantage and Regional Influence

Unlike many countries, Vietnam manufactures most of its own motorbikes, including EVs. This localization gives it a strategic edge: a successful transition could not only support domestic industry but serve as a model for other developing nations. Zifei Yang from the International Council on Clean Transportation believes Vietnam’s experience could influence other markets with similar vehicle dependence, such as Indonesia, Thailand, and the Philippines.

Yang also points out that ride-hailing and delivery fleets which cover long distances daily stand to benefit most from electrification through lower fuel costs. With smaller batteries making home charging easier and falling global battery prices, the long-term viability of EVs is improving.

Vietnam’s electrification journey is at a critical juncture, balancing visionary policy goals with deep-rooted cultural, economic, and infrastructural realities. The planned 2026 ban on gas-powered motorbikes in Hanoi is both a catalyst for innovation and a challenge for millions whose livelihoods depend on affordable, practical transport.

While the government, startups, and legacy manufacturers are all adjusting their strategies, long-term success will depend not only on incentives but on delivering electric motorbikes that are genuinely better in cost, range, and reliability than the machines they aim to replace. As Vietnam accelerates toward its electric future, the world is watching how this ambitious transformation unfolds.

Source: Reuters

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Gerik

Economic

Commodity

Japan’s Political Shift Sparks Record-Breaking Rally

The Nikkei 225 index soared 2.9% to an all-time high of 48,970.40 after Japan’s ruling Liberal Democratic Party secured a new coalition partner, paving the way for Sanae Takaichi to become the country’s first female prime minister. Takaichi is expected to champion pro-market policies, including continued low interest rates and higher fiscal spending, which contributed to the bullish momentum.

This political clarity has boosted investor confidence, especially amid global economic uncertainty. The rally reflects expectations that a stable coalition will enable smoother passage of economic reforms and further support Japan’s post-pandemic recovery.

China’s Growth Slows but Market Stays Resilient

China reported a 4.8% year-on-year GDP growth rate for Q3 its slowest pace in a year signaling lingering challenges in property markets and domestic demand. However, strong export performance cushioned the slowdown. Both the Shanghai Composite (+0.7%) and Hong Kong’s Hang Seng Index (+2.5%) advanced, as investors priced in continued policy support and hopes for improved US-China relations.

The Chinese Communist Party’s Fourth Plenum began Monday, with key five-year development goals and leadership decisions expected. While policy details will emerge gradually, markets are looking for signs of structural reforms that could enhance domestic consumption and reduce dependency on external trade.

South Korea, Australia Also Join the Rally

South Korea’s Kospi rose 1.3% to 3,796.64, buoyed by semiconductor demand and trade optimism. SK Hynix led the charge with a 3.3% gain, while automakers Kia (+2.7%) and Hyundai (+2.5%) also posted strong performances.

Australia’s S&P/ASX 200 edged up 0.2% to 9,009.10, supported by commodity stability and spillover sentiment from Asia’s broader rally.

Wall Street Sets Positive Tone With Tech and Bank Gains

U.S. markets ended last week on a strong note, with the S&P 500, Dow Jones, and Nasdaq all rising 0.5% on Friday. The S&P 500 marked its best weekly performance since early August. Confidence was restored after Trump softened his trade war rhetoric, stating high tariffs on Chinese goods were unsustainable and confirming a planned meeting with Xi Jinping in South Korea later this month.

Additionally, earnings from key U.S. banks beat expectations, easing fears of widespread credit stress. Zions Bancorp rebounded 5.8% despite acknowledging $50 million in problematic loans, while Western Alliance Bancorp gained 3.1% following a previous sharp drop linked to borrower fraud allegations.

These developments helped stabilize sentiment around U.S. regional lenders, though concerns remain. As JPMorgan CEO Jamie Dimon warned, isolated credit issues could signal deeper systemic risks if left unchecked.

Oil, Currency, and Inflation Outlook Remain in Focus

In commodity markets, oil prices dipped slightly: U.S. crude lost 19 cents to $56.96 per barrel, while Brent fell to $61.10. The pullback reflects stable supply outlooks and fading immediate geopolitical risk, despite continuing volatility in trade relations.

On the currency front, the U.S. dollar strengthened modestly to 150.87 yen, while the euro edged higher to $1.1667. The bond market remained steady ahead of a key U.S. inflation report due Friday, which could influence expectations for future Fed policy.

The Asian market rally reflects a combination of political clarity in Japan, stabilizing trade sentiment, and resilient economic data in China. While concerns over U.S. credit quality linger, positive signals from tech earnings, easing tariffs rhetoric, and proactive policymaking across Asia have created a more constructive global market environment at least for now. The week ahead, with key inflation data and geopolitical meetings, will be pivotal in determining whether this momentum holds.

Source: AP

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Daniel Carter

Central Bank

Economic

Bank of Japan Board Member Hajime Takata said the time is ripe for raising the bank's policy interest rate, looking past political instability to reiterate his conviction after he dissented from a decision to hold policy steady last month.

“I believe that now is a prime opportunity to raise the policy interest rate,” Takata said Monday in a speech to local business leaders in Hiroshima, southwestern Japan. “The once deeply entrenched norm has waned in Japan, that the price stability target has been almost achieved.”

Takata noted in his first speech after his rate hike proposal the importance of addressing inflation levels that have exceeded the BOJ's target for more than three years. His comments indicate his unflinching support for a higher rate even as it has become increasingly likely that Sanae Takaichi, an advocate of monetary easing, will become Japan's next prime minister this week.

With Takaichi's rising prospects being a driving factor, traders now see about a 24% chance for a rate hike when the bank delivers its next policy decision on Oct. 30. That's down from around 68% at the end of last month, according to pricing in the overnight swaps market.

Takata's remarks suggest there's a chance of another split in the vote at the board meeting this month if Governor Kazuo Ueda pushes to keep the policy rate unchanged at 0.5%. Takata, along with fellow board member Naoki Tamura, urged raising the policy rate by 25 basis points at the September 18-19 policy gathering, surprising most BOJ watchers.

With Japan's era of persistent deflation having run its course, Takata said authorities need to shift tack. “I have come to believe that it is vital to address the situation focusing on the level of headline inflation, which has already remained at 2% and above for the past three and a half years,” Takata said.

In his last scheduled public event ahead of the next policy decision, Governor Ueda signaled last week that he isn't ruling out the possibility of an October hike by saying the bank's rate stance hasn't changed “at all.”

Takata, a former veteran economist and bond analyst, said the lack of yen gains after the Federal Reserve lowered borrowing costs earlier this year is another factor supporting a BOJ rate hike. The yen has stayed weak, trading near a key threshold of around 150 per dollar.

“Although the Federal Reserve moved to cut the policy interest rate in September 2025, the yen saw no appreciation and has instead depreciated,” Takata said. “In addition, the fact that both Japanese and U.S. stock prices have been at historically high levels has engendered favorable market sentiment.”

Source: Bloomberg Europe

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Economic

Commodity

Canberra Steps In as Washington’s Rare Earths Backup

As China tightens its grip on rare earth exports, Australia is stepping forward as a critical minerals partner for the United States. Prime Minister Anthony Albanese’s visit to Washington marks a pivotal diplomatic moment, where Australia aims to offer itself as a strategic solution to growing Western anxieties over supply chain vulnerabilities.

At the core of the discussion is a push for a bilateral agreement on rare earths minerals crucial for everything from smartphones to military-grade equipment as Beijing’s export restrictions begin to disrupt global markets. Albanese is expected to emphasize Australia’s geological abundance and advanced mining capabilities during his Monday meeting with President Donald Trump. The talks also aim to secure continued US commitment to the Aukus defense pact, under which Australia is set to receive nuclear-powered submarines.

"Australia Equals the Periodic Table": Making the Resource Pitch

Ahead of the meeting, Ambassador Kevin Rudd championed Australia’s mining edge, noting that the country can supply 30 to 40 of the 50 designated critical minerals with relatively minimal new investment. His remarks underscore a causal relationship: as China cuts supply, Australia with the right backing can fill the gap, mitigating strategic vulnerabilities in the West’s tech and defense industries.

This pitch comes at a time when U.S. Treasury Secretary Scott Bessent is rallying allies including Australia, Canada, India, and the EU to form a united response to China’s resource leverage. The urgency is palpable as rare earths underpin technologies in electric vehicles, wind turbines, and advanced weaponry areas where secure supply chains are now seen as central to national security.

Market Reaction and Policy Momentum Support the Narrative

The optimism surrounding the talks has already sparked a rally in rare earth mining stocks. On Monday, Lynas Rare Earths Ltd. surged over 7%, while Arafura Rare Earths Ltd. climbed 21%, and Resolution Minerals Ltd. soared by as much as 49%. These sharp movements suggest investors are anticipating tangible commitments from the US, possibly including equity stakes in Australian mining firms.

Indeed, sources close to recent meetings revealed that US officials are evaluating mechanisms to directly invest in these companies a move reminiscent of Japan’s strategic funding of Lynas in 2011 and again in 2023, following earlier Chinese export bans. This potential influx of capital could not only stabilize global supply but also revive subdued prices that have so far held back Australia’s ability to fully capitalize on its mineral assets.

The Albanese government, aware of this price weakness, has proposed a A$1.2 billion reserve to support the sector a proactive fiscal measure aimed at buffering miners from market volatility while positioning them for long-term growth.

Aukus Pact Review: Strategic Assurance Beyond Minerals

Beyond minerals, Australia is also seeking reassurances on the integrity of the Aukus security agreement. While the pact’s long-term viability is not seen as under threat, Canberra is watching closely for signs of wavering U.S. commitment under Trump’s administration.

So far, the signals have been positive. Australian Defense Industry Minister Pat Conroy, following meetings in Washington, reported enthusiastic bipartisan support in Congress and from Pentagon officials. Australian officials interpret the ongoing U.S. review not as a threat to the pact, but as an opportunity to reinforce its scope and delivery.

This is critical because Aukus represents more than submarines it’s a long-term security and technology-sharing arrangement that could bind Australia, the UK, and the U.S. more tightly amid rising Indo-Pacific tensions.

Australia’s twin diplomatic efforts to establish itself as a cornerstone in the rare earths supply chain and to secure the Aukus defense partnership reflect a broader strategic pivot toward global relevance in both economic and security terms. As China tightens control over critical resources, the U.S. is seeking reliable alternatives, and Australia is stepping into that role with compelling leverage.

While much depends on follow-through, from fiscal policy to bilateral frameworks, the convergence of resource diplomacy and strategic defense cooperation positions Australia as a linchpin in the evolving U.S.-led response to China's economic coercion. Investors, policymakers, and industry leaders will be watching closely for the outcomes of Albanese’s high-stakes Washington visit.

Source: Bloomberg

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Economic

Growth Slows but Outlook Remains Optimistic

China’s GDP expanded by 4.8% year-on-year in the July–September quarter, marking the country’s weakest quarterly growth since Q3 2024. Despite the slowdown, the National Bureau of Statistics stated that the cumulative 5.2% growth through the first three quarters forms a solid foundation for achieving the 2025 full-year target of “around 5%.” This statement reflects confidence driven in part by ongoing export strength and recent fiscal stimulus measures.

While external headwinds, including renewed trade tensions with the U.S., have persisted, Chinese authorities remain focused on internal resilience. Treasury Secretary Scott Bessent is set to meet Vice Premier He Lifeng this week in Malaysia to lay groundwork for a Trump–Xi Jinping meeting later this month, which could shape the tone of bilateral trade dynamics heading into 2026.

Divergence in Economic Indicators Reveals Uneven Recovery

The Q3 figures highlight a clear divergence across sectors. Retail sales grew at their slowest pace since November 2024, indicating sustained weakness in consumer demand. Fixed-asset investment saw its first year-to-date contraction since 2020, mainly dragged down by a still-depressed real estate sector. Infrastructure and manufacturing investments also slowed, with the former growing only 1.1% and the latter down to 4%, a sharp drop from earlier highs near 10%.

In contrast, industrial output delivered an unexpected upside, rising 6.5% in September exceeding all forecasts. This suggests that production remains relatively resilient, partially supported by external demand for Chinese goods. It also underscores a continuing disconnect between supply-side capacity and domestic consumption.

Policy Responses and Structural Challenges

Policymakers have taken several steps to stabilize the economy without resorting to aggressive monetary easing. The Ministry of Finance recently authorized provinces to access 500 billion yuan ($70 billion) in unused bond quota under the national debt ceiling. These funds will be used to strengthen fiscal positions, repay company arrears, and support infrastructure investment.

While this fiscal flexibility could revive investment in Q4, economists like Ding Shuang from Standard Chartered caution that it may also reduce the urgency for additional rate cuts this year. Bloomberg Economics similarly argued that the data dampens the need for immediate stimulus but reinforces the need to address structural imbalances, especially the gap between robust production and weak domestic demand.

One of the clearest signals of deeper economic fragility is in nominal GDP, which rose just 3.7% the weakest since 2022. The decline in the GDP deflator for the tenth consecutive quarter confirms the persistence of deflationary pressure, a trend that continues to erode company revenues and consumer confidence.

Fourth Plenum and Long-Term Reform Agenda in Focus

China’s top leadership is meeting this week for the Fourth Plenum, where they are expected to finalize components of the 15th Five-Year Plan. Although the plan may not be formally released until March, early signals suggest that domestic consumption, education, and employment will receive greater attention a strategic pivot accelerated by rising geopolitical pressure, including Trump’s re-election and the evolving U.S. tariff regime.

The Chinese government has voiced its intention to implement more “proactive and impactful” macro policies, with the goal of stabilizing markets, employment, and expectations. However, the depth of structural reforms particularly efforts to reduce reliance on investment and exports remains to be seen.

Despite recording its weakest growth in a year, China remains committed to achieving its 5% expansion goal for 2025, supported by strong industrial output and renewed fiscal initiatives. Yet the widening divergence between industrial performance and domestic demand points to deeper structural challenges that stimulus alone may not resolve. As policymakers finalize the long-term economic agenda during the Fourth Plenum, global investors are watching closely to see whether China will move decisively toward a consumption-led growth model that could rebalance both domestic and global economic dynamics.