Swiss Franc Surges Amid Global Market Deleveraging, Says BofA
Despite a typically subdued performance in April, the USD/CHF pair has dropped to levels not seen since 2011. BofA suggests this move highlights Switzerland’s strong net foreign asset position, which is helping the franc weather global market stress. The analysis challenges the view that April is a seasonally positive month for the franc.
Alongside the CHF, other safe-haven currencies like the Japanese Yen (JPY) and the Euro (EUR) have also benefited from the current risk-off sentiment. The decline in equities and rising uncertainty in foreign exchange markets have prompted investors to seek shelter in currencies associated with fiscal discipline and current account surpluses.
BofA also points to growing speculation over the potential for Swiss National Bank (SNB) intervention, especially as USD/CHF 6-month risk reversals show an unusually strong tilt toward USD puts surpassing levels seen during the 2008 financial crisis and the COVID-19 market crash.
Despite this, options markets remain skeptical about the SNB's ability to counteract these strong inflows into the franc. Analysts warn that these extreme positions in both CHF and JPY may signal a shift away from U.S. assets, raising questions about the long-term confidence in the U.S. Dollar, especially in light of the persistent U.S. twin deficits.
With the franc gaining strength amid heightened geopolitical concerns and shifting investor priorities, all eyes remain on central bank policy and the evolving macroeconomic backdrop.
No Comment to " Swiss Franc Surges Amid Global Market Deleveraging, Says BofA "