CHF is having very strong gains just before the British referendum, and it is still perceived undervalued so Swiss Franc will increase in value even more. Estimates based on the purchasing power parity suggests that it may even gain 35% against the euro even before the recent wave of appreciation related to Brexit. The strength of the Switzerland currency is certainly not in the interest of monetary authorities, due to low export competitiveness and influence on inflation. And just today, SNB or Central Bank of Switzerland decided not to change current interest rates, which means that CHF will go up.
Swiss economic growth in the first quarter was not so great, but leading indicators and business climate suggests acceleration in GDP growth. And there will be capital flow just before Brexit from EU and UK stock markets. This will strenghten Franc even more. Even if SNB had proper instruments to stop flow of capital and depreciate its currency value, Swiss Bank wouldn’t do anything, because of current Brexit uncertainty. They seem like they want to just wait out this difficult period.
The conclusion is that in the coming months, the SNB will not make changes to its policies. And that, in association with Brexit and coming crisis in Eurozone is giving an investing opportunity: sell EUR/CHF for easy short term profits. You should hold it for several weeks to months, no longer than to the end of 2017, earning on post-Brexit depreciation of Euro. If you want to diversify this, you can also sell JPY/CHF or SEK/CHF. Both Japanese and Swedes are going through very serious problems, including low competitivness of both economies, and their central banks are deliberately lowering value of currencies.
Swiss economy was always considered a safe haven during period of troubles and you can easily capitalize on Euro problems, buying this currency. If you haven’t traded currencies yet, we recommend eToro, as it is very beginner friendly, with every currency pair available to trade mentioned above.
