JPMorgan and Pictet defy consensus and bet on further Swiss franc gains

(Bloomberg) — Big banks and investors including JPMorgan Chase & Co., Citigroup Inc. and Pictet Asset Management are bullish on the Swiss franc ahead of this week’s central bank meeting, defying market consensus for a weaker currency.

For these companies, global trade tensions will spur demand for safe-haven assets in the coming months, supporting the Swiss franc even if Swiss policymakers cut interest rates further. JPMorgan Chase expects the euro to rise about 5% to 0.88 euros by mid-2025, well above the median forecast of 0.94 euros in a Bloomberg survey of analysts.

Bets on a stronger Swiss franc run counter to the view that additional monetary easing and possible SNB intervention will weaken the currency. Policymakers hold their quarterly meeting on Thursday, with markets pricing in a roughly 50% chance of a half-percentage point rate cut.

“The Swiss National Bank’s extreme dovishness has not limited the Swiss franc’s outperformance,” said Daniel Tobon, head of G10 FX strategy at Citigroup. “There is no reason to see any reversal other than tactical trading.”

Although traders believe the SNB is likely to step up the pace of easing this week, rates are still expected to fall less in Switzerland than in the euro zone. The market expects the Swiss National Bank to implement 92 basis points of easing policy by September 2025, while the European Central Bank is expected to implement 144 basis points of policy.

The Swiss franc has been the best-performing Group of 10 currency after the yen since June as Donald Trump’s return to the White House stokes global trade and geopolitical uncertainty. It is currently trading at 0.93 per euro, close to the highest level since January 2015 reached last month.

The strengthening of the Swiss franc has fueled speculation that the Swiss National Bank may intervene to weaken the franc, as consumer price growth below 1% could have a deflationary impact. But for JPMorgan and Allianz, officials are holding off for now.

Greg Hirt, chief investment officer of multi-asset strategies at AllianzGI, said: “If the Swiss economy is solid and doing well and there are no inflationary pressures, then it would be entirely appropriate for the SNB that the Swiss franc appreciates regularly over time. “If nothing changes, the Swiss franc will continue to appreciate against the euro.”

Furthermore, a strong currency is no longer an issue for the Swiss economy, given the rising share of pharmaceutical companies in Switzerland’s overall growth mix. These companies are less vulnerable to foreign exchange fluctuations than the country’s famous chocolate, cheese and watch makers.

Pictet Asset Management said strong growth, a long-term current account surplus and a lack of budget deficit are important reasons to buy the Swiss franc. The Swiss company strategically holds a long position in the currency against the US dollar.

Luca Paolini, chief strategist at Pictet Bank, said: “In an environment of increasing risks of global trade wars, European weakness and political fragmentation, you can choose the Swiss franc carefully.”

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