Safe-haven currencies will stay firm in the coming months as the intensifying crisis in Europe dampens risk appetite and will challenge currency interventions and exchange rate caps in the longer run, a Reuters poll found.
Strategists, who were polled by Reuters between September 1-7, were asked if they had revised their outlook for the Swiss franc after the Swiss National Bank (SNB) shocked markets on Tuesday by setting a ceiling on the soaring franc against the euro.
The SNB said it would no longer tolerate an exchange rate below 1.20 francs to the euro and would defend the target by buying other currencies in unlimited amounts. A strong franc hurts Swiss exporters and hinders the struggling economy's attempts to stave off a recession.
The move knocked a whopping 8 percent off the franc's value and prompted some strategists to revise their forecasts, although a few wanted to monitor currency moves over the next few days, leaving their views unchanged. The calculated cross rates for the euro/Swiss franc from 38 strategists saw a sizeable shift in the one-month forecast to 1.20 in this poll compared with 1.12 just before the announcement and 1.13 in an August poll.
The six and 12-month EUR/CHF forecasts stood at 1.20 and 1.24, virtually unchanged from the August medians of 1.20 and 1.25 respectively. The medians were at 1.15 and 1.20 just before the SNB's announcement. Historically, the SNB has had a very good track record and the euro/Swiss franc would be able to hold at 1.20 until the end of the year, failing which, the central bank's Chairman Philipp Hildebrand might have to step down according to ING's Turner.
The poll medians foresee a considerably strong yen in the coming year with the USD/JPY remaining at or below the 80 mark.
The dollar is predicted to be at 77.0 yen in one month, 79.0 in six and 80 in a year, compared to 79.0, 82.9 and 86.0 respectively in an August poll, which saw its first sub-80 median in ten years of Reuters polls.
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