⚖️🇨🇭Franc And Swiss Rates Diverge On Latest Volatility Surge: Cable FX Macro

• This isn't isolated to the Swiss franc, monetary policy is having a diminished impact on currency crosses as market participants focus on trade developments. However, a list of factors come to question further franc strength.

• First, the SNB will not welcome EUR/CHF downside, and not just verbally. Second, Swiss 2y yield is moving further down, as shown below, it is already below zero. Markets expect the SNB to adopt NIRP once again.

• In any relief scenario, we could see the CHF adopted as funding of preference. While the yen, its long-term low yielder peer, is moving in the opposite direction in terms of monetary policy, the franc may be thrown to the bottom of the carry ranking.