CHF weakens on cooler-than-expected Swiss inflation – BBH

Swiss Franc (CHF) underperforms as October inflation surprises to the downside, boosting market bets on an SNB rate cut while CHF retains safe-haven appeal, BBH FX analysts report.

SNB rate cut odds jump to 70%

"CHF underperforms across the board. Swiss inflation unexpectedly cools in October, raising bets of additional Swiss National Bank (SNB) cuts. Headline CPI printed at 0.1% y/y (consensus: 0.3%) vs. 0.2% in September and is tracking below the SNB’s Q4 projection of 0.4%. Core CPI dipped to 0.5% y/y (consensus: 0.7%) vs. 0.7% in September."

"The swaps market raised odds of a 25bps rate cut to -0.25% in the next twelve months to 70% vs. 50% previously. Regardless, CHF’s status at the ultimate store of value among fiat currencies offsets the drag from the likelihood of negative rates."