The CHF has been appreciating of late, regardless of the SNB being in a position to consider additional policy action in order to ease monetary conditions.
The CHF has been mainly driven by risk sentiment, which deteriorated of late. This is partly due to more muted liquidity expectations on the back of the notion that the ECB may turn less aggressive. However, as they already indicated that QE will run its course regardless of better growth prospects it will be about other factors such as Fed rate expectations to drive sentiment and the CHF further.
We expect the Fed to stay on track, with higher rates being considered by September.
As such liquidity expectations should stay subject to downside risk. From that angle we favour selling rallies in crosses such as CAD/CHF.
