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After falling to the low at 0.9670 on August 13, USD/CHF has rallied to the 0.9800 area on Tuesday with EUR/CHF finding support below 1.0850.
Swiss sight deposits data released on Monday recorded a CHF3.8bn increase, the sharpest weekly rise since March 2017. The data indicated that the National Bank had been intervening to curb franc strength and probably stepped-up efforts as risk appetite deteriorated.
The tendency of central banks to loosen monetary policy will help to underpin risk conditions and limit demand for defensive currencies.
The Swiss franc will strengthen when global market fears intensify, especially if US-China trade relations worsen further. The ECB will also launch a fresh monetary-stimulus program in the September policy meeting.
European political concerns, such as tensions around the Italian government and on-going Brexit stresses, will provide support for the Swiss currency.
The National Bank is, however, expected to hold its own policy meeting a week after the ECB and is likely to repeat any ECB rate cut.
The recent bond-market extremes indicate that risk assets have been oversold and may partially recover.
President Trump took fright at the latest swoon on Wall Street, so his rhetoric is likely to be more supportive towards risk appetite in the short term.
Overall, near-term Swiss franc demand is likely to fade slightly amid the global economic issues.
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