LIVE MARKETS-Swiss franc could get a reality check

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com.

SWISS FRANC COULD GET A REALITY CHECK

The Swiss franc has been one of the major beneficiaries of a weaker dollar this year. It has strengthened to the tune of nearly 11.5%, even with Swiss interest rates at 0%, thanks to its robust economy and safe-haven status.

The Swiss National Bank holds its final policy meeting of the year on Thursday and even though there is a risk of outright deflation, the central bank is not expected to cut rates into negative territory.

Officials expect inflation to rise, but also say they would tolerate a temporary blip below 0%.

U.S. tariffs aren't helping, but one of the SNB's biggest headaches is homegrown: the currency. The franc CHF= has appreciated nearly 12% against the dollar this year, set for its strongest year since 2002, driving down inflation.

The Swissie has barely moved against the euro in 2025 EURCHF=EBS.

Barclays FX strategists say the most likely option for the SNB is that of a "dovish hold" - whereby rates remain unchanged, but policymakers signal a possible move to negative rates in 2026.

This would leave the franc more prone to weakness and they say their recommended "trade of the week" is to buy the euro against the Swissie: The euro is currently at 0.936 francs, they are targeting a rise to 0.948, and propose a stop loss at 0.93.

(Amanda Cooper)

EARLIER LIVE MARKETS POSTS:

WHAT TO WATCH OUT FOR FROM THE 'AI ORACLE' THIS WEEK CLICK HERE

NUDGING DOWN CLICK HERE

EUROPE BEFORE THE BELL: WATCH RATE SENSITIVE SECTORS CLICK HERE

FUTURES TRY FOR A FED FAIT ACCOMPLI CLICK HERE