CHF pressures

USD/CHF and EUR/CHF enjoyed a bounce as risk aversion eased but continued uncertainty over the situation in the Ukraine suggests that any upward momentum will be limited. The fact that the largest economic impact from any worsening in tensions with Russia will be felt in the Eurozone highlights that life may become difficult once again for the Swiss National Bank as renewed safe haven inflows move into the country. Indeed the EUR/CHF floor at 1.20 may be tested over coming weeks. Data tomorrow will likely give further reason for the SNB to oppose CHF strength, with the annual rate of CPI inflation set to remain very low.

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