📝 CHF Selloff Mainly Driven By Yen Weakness: UBS Strategy

There has been a remarkable selloff in CHF over the last couple of days, which I think has been driven by the JPY move above 134. The reason being that in the minds of many investors, the Bo] and SNB are the two major central banks resisting the hawkish pivot. So if the yen sells off, then many traders will be happy to sell CHF too.

I have made the point that the SNB cannot tolerate a weaker franc when inflation is too high and threatens to go above 3%. They will have to either start selling FCC reserves or hike rates. Given that they seem to have been reluctant to intervene, I think it's very likely they will deliver a 25bp hike next. In any case though I would not buy EURCHF or USDCHF here.

- UBS Strategy