CHF: unreserved appeal

EUR/CHF steadied near 0.97 yesterday as risk appetite was more mixed than
anything else. Concerns over Europe’s near-term outlook remained rife, as the
German government was reported to table a recession for next year, while the
domestic energy regulator warned of significant cuts in gas consumption across
the economy going into the winter. With so many pitfalls looming ahead for the
largest European countries, Switzerland’s resilient fundamentals still make a
sufficiently compelling case for stronger CHF demand over the EUR, without the
help of the SNB either. In any case, today’s FX reserves data for September is
unlikely to offer much insight on eventual interventions from the central bank and
any renewed decline would not necessarily imply active sales by the SNB, as
global bonds and stocks faced another sharp sell-off last month, while the CHF lost
some ground against the USD while still faring better than the EUR over the period.

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