Swiss Franc Gains Funding Role as $75 Billion Yen Intervention Fears Lift CHF/JPY Shorts
Updated
Updated · tmgm.com · Aug 18
Swiss Franc Gains Funding Role as $75 Billion Yen Intervention Fears Lift CHF/JPY Shorts
3 articles · Updated · tmgm.com · Aug 18
Summary
ING said investors are increasingly using the Swiss franc to fund trades, favoring it over the yen as intervention risk makes yen-funded carry positions less attractive.
Low volatility in both currencies supports that shift, but cheaper franc borrowing costs and the threat of sudden yen-buying action from Tokyo and Washington give CHF funding an extra edge.
Short CHF/JPY is emerging as a preferred trade because it offers a carry-positive way to position for yen strength while using two currencies with similar funding characteristics.
For EUR/CHF, ING said a move toward 0.95 likely needs higher oil prices and broadly higher interest rates, since the Swiss National Bank's zero-rate stance tends to leave the franc underperforming.
The view builds on the roughly $75 billion-$85 billion U.S.-Japan intervention reported earlier, which pushed traders to shift carry funding from the yen into the franc.