CHF: BNP thinks SNB will act to prevent fall of EUR/CHF, recommends traders buy USD/CHF

In a note published today, BNP evaluates the potential consequences of the ECB's increasingly dovish position regarding the Swiss National Bank's policy:

"The ECB's strong signal in terms of new easing puts pressure on the SNB, which remain committed to repel any decline in the EUR/CHF.

This therefore raises the question of what choices are available to the SNB and what the consequences would be on the CHF. We believe the SNB has a sufficiently broad range of tools to prevent a significant drop in the EUR/CHF.

It can indeed cut rates, change the overnight deposit rules or increase the pace of its interventions on the forex, and we believe it will use all of these tools.

We are therefore bearish on the CHF and recommend a buying position on the USD/CHF."