Consolidation ahead of a further fall
EUR/CHF tried to rebound from 1.1060 once again today but was beaten back lower in the past few hours in a quick 60-pip move.
The pair has been trading on either side of the 1.1060-1.1130 range for the past week after touching a 23-month low of 1.1058 on Friday.
At the moment this looks like a minor pause ahead of a further breakdown. The Swiss franc will benefit from major safe-haven flows if the talks at the G20 between Xi and Trump don't go well.
Early signs are that preliminary talks have been modest at best.
"While escalation isn't what UBS expects, a failed meeting between President Donald Trump and China's Xi Jinping that results in a new wave of tariffs would mean "major" changes to global GDP and market forecasts, UBS global head of economic research Arend Kapteyn wrote in a note. If the trade war escalates, "we estimate global growth would be 75bp lower over the subsequent six quarters and that the contours would resemble a mild 'global recession' -similar in magnitude to the Eurozone crisis, the oil collapse in the mid-1980s and the 'Tequila' crisis of the 1990s."
