Is This Finally The End Of The Line For The Swiss Franc?

switzerland swiss franc

The Swiss Franc is tanking today, a day after Europe announced its big bailout, which has temporarily halted the Greek panic.

So is this the end for the uber safe haven currency?

The latest version of Morgan Stanley’s FX Pulse suggests it might be.

Here’s the 10-second summary:

CHF has been the best performing G10 currency over the past year …

…however, our models suggest that the CHF is now reaching an overvaluation extreme.

 The strength of the CHF is now having a negative impact on the Swiss economy…

 …and Swiss leading economic indicators are giving warning signals.  

We believe that the CHF uptrend is nearing completion…

…but either stabilisation in the peripheral Europe…

…or the fear of action by the SNB is needed to turn the trend.  

We see potential for the CHF to change its status from a safe haven to a funding currency in the months ahead.

Presumably a default by the US changes the picture entirely.

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