Morgan Stanley strategists said that due to the uncertainty of US policies, the market is increasingly confident in the safe-haven status of the Swiss franc, and the exchange rate of the Swiss franc against the US dollar may soar by 17%.
In a report, strategists led by David Adams wrote that Switzerland’s low inflation, fiscal prudence and asset security make the Swiss franc “arguably the most ‘gold-like’ safe-haven currency”.
They said that in a “bear market” scenario, this could push the Swiss franc to a record high of 0.64 against the US dollar. On Monday, the Swiss franc was trading around 0.776 against the US dollar.
“The Swiss franc is an undervalued safe-haven asset, and its appreciation could be greater and faster than investors expect or the market prices in,” Adams said. He also added that the Swiss franc is the “most reliable” safe-haven asset, with the best record of excess returns during market shocks.
This call comes as hedge funds are also betting on a stronger Swiss franc. According to the latest weekly data released by the US Commodity Futures Trading Commission (CFTC), leveraged funds and other speculators currently hold a net long position in the Swiss franc, reaching the highest level since June, while a week ago they held a net short position.
Last month, the Swiss franc rose to its highest level against the euro and the US dollar in more than a decade. Switzerland’s moderate debt, stable economy and predictable policies have attracted investors, in sharp contrast to the chaotic policy-making in the US and the rising geopolitical risks.
Although the strengthening of the Swiss franc has increased the risk that the Swiss National Bank may intervene in the market to weaken the Swiss franc in order to curb deflationary pressure in the country, more and more economists admit that the Swiss monetary authorities currently seem reluctant to deal with the strength of the Swiss franc.
Morgan Stanley expects the Swiss franc to continue strengthening against other currencies and predicts that the exchange rate of the Swiss franc against the euro will rise by 5% from the current level of approximately 0.91 to 0.87.
Technical analysis:
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Gold: Despite the divergence between CPI and PCE data, geopolitical tensions will still offer support to gold. Be cautious of the price sweeping through the liquidity near 5110 within the day, and a rebound signal may then emerge. Please pay attention to observe. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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The Nasdaq: The expectation of interest rate cuts has been delayed due to the PCE data, significantly reducing the possibility of a strong short-term rise in the Nasdaq. It is still advisable to focus on catching rebounds after low liquidity. Pay attention to the liquidity signal near 24,400 within the day. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: There is a disconnect between the rhetoric regarding the situation in Iran and the actual military deployment of the US military. However, we believe that the situation will only become more complicated. Therefore, we have prepared two ways to buy. One is to place a buy limit order in the green area demand zone; the other is to buy after a pullback following a break of the recent consolidation range. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key financial data and events to focus on:
At 22:10, US Federal Reserve Governor Waller delivered a speech.
23:00 US Conference Board Consumer Confidence Index for February
