There is scant chance that the Euro will breach CHF 1.20 before the European Central Bank meeting on monetary policy of 14 December, but after that? A crawl-back to 1.20 – which the Swiss National Bank held as a floor until in early 2015 it let the franc float – could be on the cards. But it will take time.
Latest data are disappointing. Core inflation in the Eurozone eased to 1.1% annually in September, and broader inflation contracted during the summer, which will make the ECB wary of tightening money. We believe that the ECB will stay very cautious, taking only limited measures to boost the Euro. Economic growth has returned to the Eurozone, but further rises in the Euro’s value are still on the horizon.
By Arnaud Masset