Danske Research discusses EUR/CHF outlook in light of the latest developments of the banking sector.
"In the late hours of Wednesday, the Swiss National Bank (SNB) and Swiss financial regulator FINMA issued a joint statement in an effort to assure markets stating that the Credit Suisse Group will receive a liquidity backstop if needed, although Credit Suisse meets the minimum capital and liquidity requirements. The statement read that the SNB and FINMA assert that "the problems of certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets" but that they "follow the developments very closely". The statement had limited impact on the cross and EUR/CHF continued its move higher," Danske notes.
"While risk-offs are usually a positive for the Swiss Franc, the Credit Suisse specific turmoil acts as a clear negative for the currency. For now, EUR/CHF remains in the hand of developments in the banking sector but most importantly that of Credit Suisse," Danske adds.