FXstreet.com (Barcelona) - In a metaphoric way, Sebastien Galy, FX strategist at Societe Generale, says that book options as burning as EURCHF "explodes higher." "The great portfolio outflows are yet to materialize boosting EURCHF," the analyst adds, suggesting: "We target an overshoot above 1.30 as investors put on strategic shorts in CHF."
"The Swiss Franc should overshoot into the 1.30-1.35 region as investors start using the CHF as a funding currency and safe haven flows are squeeze out. Banks for example hold over 100bn in CHF deposits. For now, the move higher in EURCHF is driven by the risk management of existing option structures and a repositioning of hedge funds. The Swiss Franc remains very expensive across multiple metrics and lags the reality of a far more stable Europe," he concludes.